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OF  CANADA 


THE 

CURRENCY  AND  THE   BANKING  LAW 

OF  THE  DOMINION  OF  CANADA 

CONSIDERED  WITH  REFERENCE  TO  CURRENCY 
REFORM  IN  THE  UNITED  STATES 


BY 

WILLIAM   C.   CORNWELL 


Or 

UNivr 


G.  P.  PUTNAM'S   SONS 

^^^^   ^'^•^'^  LONDON 

.7   WEST  rWE,^V-T„..0   STK..T  ,,    3EDPORO  STRKCT.    STR^V^O 

^he  ^nithtrbochtr  tlrtss 


1895 


*0': 


,. 


Copyright,  1S94 

BY 

WILLIAM  C.  CORNWELL 


Electrotyped,  Printed  and  Bound  by 

"Cbc  TknichcrbocScr  Ipress,  IRcw  IL'orft 

G.  P.  Putnam's  Sons 


NOTE. 


THE  substance  of  the  matter  included  under  the  head  of 
the  "Canadian  Banking  System — Its  Growth  and 
Present  Operation  "  in  the  following  pages  was  embodied  in 
an  address  delivered  at  the  American  Bankers'  Convention, 
New  Orleans,  on  November  12,  1891.  The  situation  in  the 
United  States,  then  portrayed,  still  continues,  except  that 
the  repeal  of  the  purchase  clause  has  since  been  accom- 
plished. The  forecast  of  danger,  made  at  that  time,  was 
realized  during  1893.  The  attention  of  the  whole  country 
is  now  centred  upon  the  struggle  for  currency  reform. 

The  Banking  Act  of  Canada  is  given  entire  in  the 
second  part  of  the  book.  The  clauses  and  sections  of 
especial  interest,  in  view  of  reforms  proposed,  are  printed 
in  heavy-faced  type. 


lOoUh:; 


CONTENTS. 


PACE 

The  Canadian  Banking  System — Its  Growth  and  Operations  3 
Conditions  in   the   United  States  before  Repeal   of   the 

Silver-Purchase  Clause 3 

American  Experience  with  Bank  Notes          ....  4 

Growth  of  the  Canadian  System 6 

Canadian   Bank  Act  of  To-Day 11 

Branch  Banking 14 

Security 19 

Elasticity 21 

The  Banking  Act  of  the  Dominion  of  Canada,  1891   .         .  30 

Application  of  Act 31 

Incorporation  and  Organization  of  Banks   .        ...  S3 

Internal  Regulations 36 

Capital  Stock 41 

Shares  and  Calls 43 

Transfer  and  Transmission  of  Shares 45 

Annual  Statement  and  Inspection 49 

Dividends 50 

Reserves 51 

Note  Issue 52 

Business  and  Powers  of  the  Bank 61 

Returns  by  the  Bank 71 

Insolvency 74 


CONTENTS. 


Offences  and  Penalties 
Public  Notices      .        .        .        _ 
Dominion  Government  Cheques 
Commencement  of  Act  and  Repeal 
Schedules 
Memoranda    . 


77 
78 
78 
78 
79 

H 


THE  CANADIAN  BANKING  SYSTEM— ITS  GROWTH 
AND  PRESENT  OPERATION. 


THE  CANADIAN  BANKING  SYSTEM— ITS  GROWTH 
AND  PRESENT  OPERATION. 


INTRODUCTION,  WRITTEN  IN  t891-CONDITIONS  IN  THE  UNITED  STATES  BEFORE 
REPEAL  OF  THE  SILVER-PURCHASE  CLAUSE. 


THIS  country  is  practically  at  sea  on  the  currency  ques- 
tion. We  are  pounding  along  like  a  great  ship  on  the 
ocean,  with  the  engines  at  their  utmost,  politics  at  the 
wheel,  ignorant  of  our  bearings,  and  liable  at  any  ^^^  panic 
moment  to  collision  and  disaster  ;  for,  what  with  predicted. 
an  unpliable,  inelastic  circulating  medium,  much  of  it  base 
in  value  and  ground  out  mechanically  and  without  scientific 
control,  at  the  rate  of  four  and  a  half  millions  per  month, 
no  one  can  say  what  the  outcome  will  be. 

At  such  times  wise  men  glance  abroad  and  backward  to 
get,  if  possible,  some  light  upon  the  dark  waters  from  the 
past  and  present  experiences  of  other  nations,  looking  for 
I  desire  in  this  paper  to  call  the  attention  of 
such  men  to  the  experiences  of  our  sister  nation,  Canada, 
on  the  grounds  that,  while  being  nearest  to  us  geographi- 
cally and  physically,  her  conditions  are  the  most  closely 
allied  to  our  own  of  any  community  that  we  know  of. 


4  THE  CURRENCY  AND   THE 

Canada  has,  for  many  years,  existed  under  a  banking 
law  wh,ch,  with  additions  and  in,provements  from  time  to 

aoeqSItb      '""'=■  ''^'  ^'^'="  '^'^^  ^  circulating  medium  fully 
bank.no        meetmg  all   the  requirements  of  every  season 
both  as  to  elasticity  and  safety,  and  to-day,  with 
the  .mprovement  brought  about  by  the  amended  law  ^oing 
mto  effect  last  July,  she  has,   I  believe,  for  her  needs   the 
most  perfect  currency  system  of  any  nation  in  the  world 
except,  perhaps,  that  of  Scotland,  after  whose  system  her's 
IS  closely  modelled.     In  fact,  the  Canadian  partakes,  in  its 
character,  of  the  sterling  qualities  of  the  Scotch  system   just 
as  the  Canadians  themselves  possess  many  of  the  admirable 
characteristics   of  that  grand  people  from  whom   they  are 
largely  descended  or  made  up. 

AMERICAN    EXPERIENCE    WITH    BANK    NOTES. 

Before  entering  upon  the  subject  proper,  it  may  be  well 
to  refer  to  the  period  of  bank-note  issues  in  the  United 
A  PREJUDICE.  ^"'"'''  previous  to  the  inauguration  of  our 
national  system,  as  the  disasters  of  that  time 
and  the  wild  and  exciting  incidents  attending  the  progress 
explosions,  and  final  suppression  of  the  State-bank  issues 
seem  to  have  planted  a  prejudice  in  the  minds  of  Americans 
against  any  kind  of  individual  bank  issues  without  dis- 
crimination, notwithstanding  that  in  several  of  the  States 
the  business  was  conducted  with  the  utmost  honor  and  com- 


BANKING  LA  W  OF  CANADA.  5 

plete  success.  I  may  say  that  the  prejudice  was  planted 
even  farther  back  in  the  history  of  America  by  the  burnt- 
child  experience  with  the  old  Continental  notes  which  were 
a  dead  loss  to  the  enormous  amount  at  that  time  of 
$196,000,000. 

This  was  along  in  the  latter  part  of  the  last  century. 
Just  before  the  final  collapse,  a  desperate  effort  was  made 
to  hold  up  the  currency,  but  notwithstanding  all  that  the 
Government,  aided  by  the  leading  men  of  that  period,  could 
do,  a  dozen  eggs  sold  for  $5000  in  Continental  paper 
money,  and  a  silk  hat  of  the  period,  which  continental 
would  be  worth  about  $7.00,  cost  $140,000 
in  Continental  currency.  The  word  was  burned  into  the 
language,  and  then,  as  now,  utter  worthlessness  of  a  thing 
was  conveyed  by  the  expression,  "it  is  not  worth  a  con- 
tinental." 

To  many  of  you,  the  older  members  of  this  association, 
the  fiery  destruction  of  the  State  Bank-note  era,  in  the 
South  and  West,  the  Wild-Cat  period,  as  it  is 

^  WILD-CAT. 

called,  is  still  vivid.  Those  were  times  when 
the  contents  of  a  man's  pocket-book  would  slowly  burn  to 
ashes  through  the  failure  of  a  dozen  banks  of  issue  in  an 
hour,  or,  when  the  farther  one  went  from  home,  the  ereatcr 
became  the  discount  on  the  notes  he  carried  with  him,  par- 
ented,  as  they  were,  by  banks  of  no  reputation  beyond  the 
town  line  where  they  happened  to  be  situated. 

Even  in  those  uncertain  days  the  humor  of  the  American 


^  THE  CURRENCY  AND   THE 

gave  rise  to  that  venerable  story  of  the  man  who  had  started 
NO  B,..s  on  a  journey,  and  after  he  had  proceeded  about 
three  miles,  heard  that  a  bank  near  by  had 
failed.  He  ran  all  the  way  home  to  see  if  he  had  any  bills 
on  that  bank  and  when  he  got  there  found  that  he  had 
any  bills  on  that  bank,  or  on  any  other  bank 

Th,s  was  the  time  of  the  "  Red  Dog"  bills,  as  they  were 
called.  Banks  would  locate  temporarily  in  a  place  and  issue 
RED  DOG.  '^'"=-  ihen,  when  they  had  exhausted  the  re 
sources  of  that  community,  would  move  over- 
n-ght  to  a  distant  town  and  there,  instead  of  having  new  bills 
pnn  «f,  wou  a  use  the  old  ones,  simply  stamping  ^he  nam 

nteRerDor''""^^^'' '''■'' '"^^'''"^-  "^^  *<= 
No  wonder  that  after  experiences  of  this  kind,  a  nation 
should  come  to  regard  the  very  principle  of  State  issue  with 
'^ISSi^  ''"'y  ''°''™'-'  ^"d  should  embrace  the  opposite  ex- 
treme  of  a  national  and  over-secured  currency  as 
an  unalloyed  blessing,  refusing  to  consider   anythin.  else 

on    P""'\''^"^'^'^  °f  'he  system,  as  far  as  circulation  is 

::rvir:L:.^°"^^'^"^^--------"^ 

GROWTH    OF    THE    CANADIAN    SYSTEM. 

I  propose  now  to  sketch  briefly  the  growth  of  the  Cana 
d.an   system,  to  show  how   it  develope^d  gradually  out  o; 


BAXKING  LA  W  OF  CANADA.  7 

experience,    guided    by    wisdom,    avoiding    the    growth  of 

.  THE  CANA- 

dangerous  fungus  growths  always  ready  to  spring  dian  system. 
up  in  the  hot  earth  of  financial  legislation,  and  has  come  to 
be  a  sturdy  and  fruitful  tree. 

In  the  old  Province  of  Canada,  before  the  formation  of  the 
Dominion,  banking  was  done  in  a  cautious  and  tentative  way, 
and  the  skeleton  structure  for  the  present  system  was  erected. 

For  a  long  time  previous  to  1866,  banks  under  royal 
charter  issued  their  own  notes,  to  the  amount  of  their  paid- 
up  capital,  but  these  were  fully  secured  by  a  deposit  of  pub- 
lic or  government  securities.  This,  you  will  perceive,  is 
what  is  called  specially  secured  circulation,  and      specially 

1  •         •     1  r  >T        •  1    T^         1  •  secured 

IS  the  prmciple  of  our  National  Bank-note  issue,  circulation. 
It  is  well  to  observe  that  this  experiment  was  tried  by  Canada 
long  ago  and  formed  a  step  toward  the  better  plan  of  general 
security. 

In  1866  a  national  currency  was  inaugurated  and  an  at- 
tempt made  to  provide  for  a  surrender  by  the  banks  of  their 
right  to  issue.    Fortunately,  this  did  not  succeed.       national 

.  •  1     ^  r  CURRENCY 

National  currency  was  issued,  $8,000,000  at  first,  demanded. 
running  up  to  $20,000,000  in  18S0,  secured  by  a  25  %  re- 
serve, but  the  banks  not  only  held  on  to  their  rights,  but 
procured  an  extension  of  them. 

They  were  allowed  to  issue  notes  to  the  amount  of  their 
unimpaired  paid-up  capital,  luithotU  deposit  of  securities.  The 
tax  on  circulation,  which  had  been  one  per  cent., 
was  removed.      Other  wise  provisions  were  made, 


PROGRESS. 


8  THE  CURRENCY  AND  THE 

and,  as  they  still  exist,  I  shall  speak  of  them  later  on.  Stock- 
holders were  held  doubly  liable. 

In  the  year  1880  it  became  necessary  to  act  upon  the 
question  of  the  renewal,  or  not,  of  bank  charters  which  ex- 
pired in  1 88 1.  It  was  a  year  which,  in  Canadian  politics, 
AN  AMERICAN  ^ore  ucarly  resembled  an  American  situation 
SITUATION.  ^}-^^j^  ^j^y  -which  that  country  has  perhaps  ever 
experienced.  The  fanatical  element  was  partially  unleashed, 
and  was  baying  at  the  moon  in  that  wild  and  deep-toned 
howl  that  we  are  so  familiar  with  in  this  country.  Tariff 
reform  had  won  a  victory,  and  the  excitement  of  the  contest 
extended  into  an  agitation  for  a  national  currency. 

The  agitation  grew,  and  developed  finally  into  a  furor 
for  "  rag  money,"  and  a  stampede  against  bank  privileges. 

If  this  is  not  an  American  situation,  it  will  be  hard  to 
find  one.  Nevertheless,  the  very  exigencies  of  the  contest 
brought  to  the  front  the  very  best  in  the  opposition,  and  the 
bankers  and  leading  financial  minds  of  the  Dominion  wrested 
from  the  fiery  struggle  a  still  more  perfect  bank  act,  which 
renewed  charters  for  ten  years  more. 

The  crowning  achievement  at  this  time  was  the  formula- 
tion of  that  clause  in  the  act  which,  for  the  first  time,  made 
^^^  bank   notes   a  prior  lien   on   the  assets   of    the 

acS^ve'!''  bank— a  first  charge  before  all  others.  This  was 
MENT.  ^^  rinorinor  stroke,  which  drove  home,  once  for 

all,  the  question  of  security,  and  made  it  sure.  Some  minor 
changes  were  made  at  this  time. 


BANKING  LAW  OF  CANADA.  9 

This  was  the  Bank  Act  of  1880.  Ten  years  later  charters 
were  to  expire  and  a  new  act  would  be  necessary.  You  will 
see  how,  step  by  step,  the  system  was  being  im- 
proved. There  was  no  wild  rush  from  one  new 
scheme  to  another.  Beginning  on  a  sure  foundation,  with 
deliberation,  determination,  and  aided  by  the  best  and  most 
thoroughly  trained  ability,  the  structure  was  growing  steadily 
and  solidly.  And  now  the  year  1890  once  more  reopened 
the  question.  This  time  there  was  no  such  outburst  of  the 
fanatical  spirit  manifested  by  the  opposition  ten  years  before. 
Some  dangerous  measures,  to  be  sure,  were  proposed  by  the 
Government,  but  upon  full  explanation  by  the  bankers  of 
what  the  outcome  would  be  these  were  abandoned.  I  quote 
now  from  the  able  address  of  Mr.  George  Hague,  General 
Manager  of  the  Merchants  Bank  of  Canada,  at  the  annual 
meeting  of  that  institution  last  year,  soon  after  the  passage 
of  the  act.  He  says,  in  speaking  of  the  conference  between 
the  Government  and  the  bankers  : 


"  The  representations  of  the  banks  were  received  with 
all  possible  consideration  by  the  Government,  courtesies 
and     their     recommendations    were     o^enerally  by  the 

1,1  o  J  GOVERNMENT. 

adopted. 

"  The  Government,  however,  had  views  of  their  own 
upon  several  matters  which  they  courteously  communicated 
for  consideration.  Some  of  these  were  con-  dangerous 
sidered  so  objectionable  that  we  felt  constrained  proposals. 
to  oppose  them,  not  only  in  your  interest,  but  in  the  public 
interest. 


10  THE  CURRENCY  AND  THE 

"The  proposal  to  compel  the  holding  of  a  fixed  reserve 
of  money  in  proportion  to  their  liabilities  was  demurred  to 
FIXED  RE-  by  a  large  majority.  It  was  pointed  out  that  to 
SERVE  insist  upon  the  banks  keeping  locked  up  in  their 

UNWISE.  safes  at  all  times  any  fixed  sum  of  money  would 
interfere  with  the  rights  of  creditors,  to  meet  whose  demands 
all  the  banker's  cash  is  held.  It  was  shown  that  such  a 
measure  had  never  been  tried  in  practice  except  in  the 
United  States,  and  that  there,  when  banks  attempted  to 
keep  the  law,  violent  fluctuations  in  the  rate  of  interest 
ensued.  And,  further,  that  circumstances  occurred  nearly 
every  year  that  compelled  them  to  disregard  the  law 
altogether. 

"  The  proposal  was  withdrawn 

"During  the  progress  of  the  bill  through  the  House  a 

POLITICAL       remarkable  absence  of  political  feeling  was  mani- 

FEELiNG         fest.      Members  of  both  parties  gave  themselves 

to  the  work  of  considering  how  to  make  the  act 

as  nearly  perfect  as  possible." 

I  refer  fully  to  these  matters  to  show  how  differently 
financial  legislation  is  conducted  in  Canada.  It  does  seem 
TRUE  METH-   as  tfiough  this  idea  of  legislation  was  the  proper 

ODS  OF  LAW  .  11     .         f  1     •  1 

MAKING.  one — that  is,  to  call  in  lor  advisement,  when  a 

subject  is  under  consideration,  the  very  highest  authorities 
on  that  subject — in  other  words,  the  men  whose  experience, 
day  by  day  for  years,  and  whose  thorough  training  entitles 
them  to  speak  for  this  or  that  industry  or  profession.  How 
different,  perhaps,  in  the  United  States  would  be  the  condi- 
tion of  our  own  currency,  if  during  past  years  the  leading 
financiers  and  economists  of  the  nation  had  had  a  prevailing 
voice  in  the  matter. 


BANKING  LAW  OF  CANADA.  ii 

CANADIAN    BANK    ACT    OF    TO-DAY. 

I  come  now  to  the  Canadian  Bank  Act  as  it  stands.  It 
is  a  comprehensive  piece  of  legislation,  containing  over  one 
hundred  clauses.  Under  its  provisions,  the  the  bank  act 
banking  of  Canada  is  going  on  to-day  in  an 
even,  effective  manner,  and  the  full  requirements  of  business 
in  the  way  of  currency  are  met.  I  shall  mention  only  the  lead- 
ing features,  some  of  which  have  already  been  referred  to. 

First  of  all,  banks  of  issue,  the  joint  stock  banks,  and 
these  are  the  only  ones  of  which  we  are  treating  (there  are, 
of  course,  in  Canada,  private  banks  and  savino-s 

•^  CAPITAL. 

banks),  must  obtain  their  charters  from   Parlia- 
ment, and  must  have  a  subscribed  capital  of  $500,000,  with 
at  least  $250,000  paid  up. 

The  shareholders  in  these  banks  are  doubly  liable.     That 
is,  they  can  be  called  upon,  in  case  of  failure  and  double 

deficit,  for  an  amount  in  addition,  equal  to  what 
they  have  already  invested  in  the  shares  fully  paid  up. 

No  dividend  is  allowed  which  will  impair  the  capital  of 
the  bank,   and   no  dividend  hic^her  than   8   per    „^^^„,^^^^ 

&  i  RESTRICTED 

cent,  per  annum,  until  a  surplus  or  rest  has  been     dividends. 
built  up  of  at  least  30  per  cent. 

Monthly  statements  giving  full  particulars  are  to  be  fur- 
nished to  the  Government,  and  these  are  published  in  the 
daily   papers,  and,   I    need   not   say,  scrutinized 

_  ^  STATEMENTS. 

with    much   intelligence  and   interest   by   share- 
holders, depositors,  and  Canadian  business  men  generally. 


12  THE  CURRENCY  AND  THE 

An  annual  statement  is  furnished,  with  full  details  of 
profit  and  loss,  to  the  yearly  meeting  of  shareholders,  and 
at  these  meetings  the  general  manager  usually  delivers  an 
address,  and  there  is  a  common  interchange  of  views. 

In  the  interest  of  the  Government,  and  in  order  to  keep 
the  Dominion  notes  in  use,  40  per  cent,  of  the  reserve  held  by 
DOMINION  the  banks  is  required  to  be  so  held  in  Dominion 
notes  ;  and  any  bank  making  a  payment  up  to 
$100  must,  if  so  requested,  pay  in  Dominion  notes.  {No 
torn  or  defaced  notes  of  any  kind,  either  Govern77ient  or  ba7ik, 
are  allowed  to  be  paid  out.) 

There  are  wise  restrictions  as  to  loans  on  real  estate, 
etc.,  and  regulations  as  to  boards  of  directors.  A  bank  has 
prior  lien  on  warehouse  merchandise,  and  on  stocks  and 
bonds,  etc.,  and  is  given  other  privileges.  Employees  are 
PENSION  not  forgotten,  authority  being  given  to  establish 

guarantee  and  pension  funds  out  of  the  bank's 
holdings,  for  faithful  servants. 

Examinations  are  not  conducted  by  the  Government, 
but  under  the  branch  system  each  bank  has  its  Inspector 
General,  who  is  a  man  of  marked  ability  and  skill,  a  thor- 
ough banker  by  education,  advanced  from  the  lowest  round, 
a  man  who  ranks  next  to  the  General  Manager,  and  fully 
EXAMiNA-  competent  to  take  the  latter's  place.  With  ex- 
aminations conducted  by  such  men,  the  Canadian 
bank  shareholders  and  depositors  may  well  feel  assured.  I 
fear  our  National  and  State  bank  examinations  would  suffer 
by  comparison. 


BANKING  LA  W  OF  CANADA.  13 

And  now  we  come  to  the  important  provisions  regarding 
note  issues. 

The  amount  of  notes  to  be  issued  must  never  exceed 
the  amount  of  unimpaired  paid-up  capital.  note  issues. 

They  are  a  first  Hen  upon  the  assets  of  the  bank,  taking 
precedence  even  of  Government  claims. 

The  double  liability  of  stockholders  is  a  last  resort  to 
the  bank  itself  in  case  all  the  other  assets  are  not  sufficient 
to  pay  the  note  holders. 

But  a  new  and  additional  security  for  notes  was  intro- 
duced in  1890,  known  as  "  The  Bank  Circulation  Redemp- 
tion Fund."     This  fund  is  made  up  of  a  contri- 

1  •  f     /-  1  111  1  SECURITY. 

bution   ot  nve  per  cent,    by  each   bank   on  the 

amount  of  its  own  notes  in  circulation  for  the  twelve  months 

previous  to  July  first  of  each  year  (adjusted  annually). 

The  fund  is  deposited  with  the  Government  (which 
allows  upon  it  to  the  banks  three  per  cent,  per  annum  in- 
terest), and  is  for  the  special  purpose  of  redeeming  the 
notes  of  any  suspended  bank. 

In  case  of  suspension,  notes  of  the  suspended  bank 
begin  at  once  to  draw  interest  at  six  per  cent,  until  redeemed 
by  the  receiver  of  the  failed  bank.      If  not  re-     suspended 

'  ....  NOTES  DRAW 

deemed  m  two  months  in  this  way,  the  notes,  interest. 
with  interest,  are  paid  out  of  the  redemption  fund,  which  is 
reimbursed  by  the  failed  bank  as  soon  as  possible.  In  case 
of  depletion  of  the  fund  it  is  to  be  made  up  again  by  con- 
tributions yearly  of  one  per  cent,  of  its  past  year's  circula- 
tion   by  each    bank.      This    interest    bearing   quality    after 


14  THE  CURRENCY  AND  THE 

suspension,  imparts  an  investment  value  to  the  notes  of 
broken  banks,  as,  being  absolutely  secure,  they  would  be 
eagerly  cashed  by  banks  desiring  to  earn  the  six  per  cent. 
Such  notes  might  bear  a  premium,  but  they  could  not  possi- 
bly fall  to  a  discount. 

There  is  no  tax  upon  circulation. 

Each  bank  is  required  to  appoint  agencies  for  the  re- 
demption   of    its   notes   in   the  principal  cities  of   Canada, 

REDEMPTION  coveHug  all  territory  from  one  end  of  the  Do- 
agencies.  .     .  ,  ,  ry,,   .        1  .11 

mmion  to  the  other.  1  his  does  away  with  the 
old  condition  which  forced  notes  of  far-off  banks  to  a  dis- 
count, making  the  currency  National — a  brilliant  quality  of 
our  own  national  bank  notes,  imparted,  however,  in  a  dif- 
ferent manner. 

I  have  thus  briefly  enumerated  the  main  features  of  this 
admirable  system  of  banking  and  note  issues.  In  order  to 
fully  appreciate  its  workings  it  must  be  understood  that  the 
branch  system  is  a  very  necessary  part  of  its  operations,  and 
that  the  notes  of  all  the  banks  are  sent  in  and  redeemed 
daily,  like  checks. 

The  branch  system  of  banking  has  received  little  atten- 
tion in  the  United  States.  Its  effective  operation  in  Canada 
BRANCH  is  worthy  of  attention.     And  the  conditions  are 

so  similar  to  our  own  that  the  study  becomes  an 
important  one. 

The  great  advantages  of  the  system  are  now  universally 
recognized  among  the  people. 


ITS  GROWTH. 


BANKING  LA  W  OF  CANADA.  15 

"  There  was  a  time  in  Canada,  about  twenty  years  ago," 
says  Mr.  B.  E.  Walker,  General  Manager  of  the  Canadian 
Bank  of  Commerce,  "  when  some  people  thought  that  in 
every  town  a  bank,  no  matter  how  small,  provided  it  had  no 
branches  and  had  its  owners  resident  in  the 
neighborhood,  was  a  greater  help  to  the  town 
than  the  branch  of  a  large  and  powerful  bank.  In  those 
days,  perhaps,  the  great  banks  were  too  autocratic,  and  had 
not  been  taught  by  competition  to  respect  fully  the  wants  of 
each  community.  If  this  feeling  ever  existed  to  any  ex- 
tent, it  has  passed  away.  I  do  not  know  any  country  in  the 
world  so  well  supplied  with  banking  facilities  as  Canada. 
The  branch  system  not  only  enables  every  town  of  one  thou- 
sand or  twelve  hundred  people  to  have  a  joint  stock  bank, 
but  to  have  a  bank  with  a  power  behind  it  generally  twenty 
to  fifty  times  greater  than  a  small  bank  would  have." 

It  is  true  that  here  is  an  element  of  danger — the  danger 
of  more  credit  to  a  small  community  than  it  can  stand,  and 
consequent  ruin.      Rare    wisdom    and   firmness, 

^  ...  DANGERS. 

and  especially  thorough  training  in  the  profes- 
sion, are  required  to  counteract  this  danger. 

But  so  convinced  of  the  superior  value  of  the  branch 
system  are  the  Canadians,  that  there  are  only  seven  banks 
which  have  no  branches.  The  other  38  control  about  4(X) 
bank  offices. 

These  great  banks  of  Canada  each,  with  from  ten  to 
fifty  branches,  gather  up  the  money  lying  idle  in  one  locality 
and  transmit  it  automatically  to  another  locality 

.  .  ,  ADVANTAGES. 

which  has  enterprise  enough  to  use  it.      It  must 

be  admitted  that  this  is  what  the  banks  in  our  own  country 


i6  THE  CURRENCY  AND  THE 

do  not  do.  There  is  no  systematic  distribution  of  money  here. 
The  consequence  is  that  rates  of  interest  may  be  four  to  six 
per  cent,  in  the  extreme  East,  and  twelve  to  twenty  per  cent, 
in  the  West.  This  is  not  so  in  Canada.  From  one  end  of 
their  broad  domain  to  the  other,  from  Quebec,  Montreal, 
Toronto,  Halifax  to  far  Manitoba,  the  extreme  variation  in 
rates  is  not  over  two  per  cent. 

On  this  part  of  the  subject  Mr.  Walker  says  : 

"In  Canada  we  see  the  deposits  of  the  saving  classes 
applied  directly  to  the  country's  new  enterprises  in  a  man- 
ner nearly  perfect.  The  Bank  of  Montreal  borrows  money 
from  depositors  at  Halifax  and  many  points  in  the  Maritime 
Provinces,  where  the  savings  largely  exceed  the  new  enter- 
prises, and  it  lends  money  in  Vancouver  or  in  the  North- 
west, where  the  new  enterprises  far  exceed  the  people's 
DISTRIBUTION,  savlngs.      In  what  other  country  is  such  a  splen- 

'  did  development  of  banking  to  be  seen  as  that 
involved  in  transferring  the  idle  money  of  the  Atlantic 
towns  and  cities  to  the  new  centres  of  enterprise  on  the 
Pacific.  My  own  bank  in  the  same  manner  gathers  deposits 
in  the  quiet,  unenterprising  parts  of  Ontario,  and  lends  the 
money  in  the  enterprising  localities,  the  whole  result  being 
that  thirty-eight  business  centres,  in  no  case  having  an  exact 
equilibrium  of  deposits  and  loans,  are  able  to  balance  the 
excess  or  deficiency  of  capital,  economizing  every  dollar, 
the  depositor  obtaining   a  large  rate  of  interest,   and  the 

borrower  obtaining^  money  at  a  lower  rate  than 

LOW  RATES.      1  .  ?     1  1         •  r   /--  n     •        • 

borrowers  m  any  of  the  colonies  of  Great  Britam, 
and  a  lower  rate  than  in  the  United  States,  except  in  the 
very  great  cities  in  the  East. 

"  In  Canada  capital  marches  automatically  across  the  con- 
tinent to  find  the  borrower,  and  the  extra  interest  obtained 


BANKING  LAW  OF  CANADA.  17 

scarcely  pays  the  loss  of  time  it  would  take  to  send  it  so  far, 
were  the  machinery  not  so  perfect." 

In  this  way  the  interests  of  one  part  of  the  community 
are  interwoven  with  those  of  another  far  away.  The  bank 
fulfils  its  proper  function  of  carefully  conserving  the  credit 
of  the  whole  country  and  distributing  it  to  the  most  worthy 
in  the  most  economical  manner  possible.     The       national 

^  CHARACTER 

interests  of  the  bank  are  not  local,  but  wide-  imparted. 
spread.  Its  character  becomes  essentially  and  truly  National. 
The  system  resembles  a  great  centralizing  reservoir,  con- 
densing the  moisture  from  the  vast  areas  where  it  exists  in 
redundant  quantities  and  dispersing  it  gently  like  summer 
rain  over  the  arid  plains.  This  is  the  fulfilment  of  one  of 
the  great  fundamental  ideas  of  modern  banking.  What  was 
begun  to  be  done  away  back  in  the  seventeenth  century  by 
the  goldsmiths  of  London  is  perfected  in  the  branch  system 
of  banking  in  Canada  to-day. 

We  come  now  in  our  investigation  of  the  workings  of 
the  Canadian  bank-note  system  to  the  important  relation 
between  the  branch  system  and  the  note  issues.      branches 

AND  THE 

The  Canadian  banks  have  a  right  to  issue  bank  note  issue. 
notes,  as  we  have  seen,  to  the  extent  of  their  unimpaired 
paid-up  capital  ;  but  this  right  would  be  of  little  value  if 
these  notes  could  not  be  gotten  into  general  circulation. 
And  if  each  bank  had  but  its  one  head  office,  little  headway 
could  be  made  in  this  direction,  as  the  notes  are  subject  to 
daily  redemption,  and,   in  order  to  keep  afloat  as  much  as 


i8  THE  CURRENCY  AND  THE 

possible  of  its  own  issue,  each  bank  sends  in  daily,  for  re- 
demption, all  the  notes  of  other  banks  which  come  into  it. 
But,  under  the  branch  system,   the  head  office  supplies  its 
branches  with  all  the  till  or  teller's  money  thev 

TILL  MONEY.  ■'  ^ 

may  need — money  for  the  payment  of  local 
checks,  pay-rolls,  etc.,  etc. — by  sending  out  to  it  notes  of  its 
own  issue.  The  advantage  of  all  this  is  that  the  till  money, 
the  cash  reserve  of  the  branches  costs  no  interest,  and  is  a 
source  of  large  profit  to  the  bank  of  issue.  And  here  is  the 
inducement  for  the  formation  of  branches,  and  without 
which  the  growth  of  the  branch  system  would  be  much 
stunted.  You  will  see  at  once  that  all  this  is  rendered  pos- 
sible by  the  fact  that  the  bank-note  issue  is  secured  by  the 
general  assets  of  the  bank,  and  costs  no  interest.  Whereas, 
GENERAL  VER-  if   Specially    secured,    as  are  our  own  national 

SUS  SPECIAL 

SECURITY.  bank  notes,  it  would  take  actual  capital  to  buy 
the  securities,  and  at  the  present  low  rate  of  governments 
would  be  unprofitable. 

This  point  is  so  important  that  I  desire  to  make  it  very 
clear.     A  correspondent  in  Canada  writes  : 

"  In  the  United  States  it  probably  does  not  occur  to  the 
banker  to  make  any  distinction  between  the  money  in  the 
teller's  drawers  or  tills  and  the  money  kept  in  reserve  in  the 
safes,  or,  as  we  call  them,  treasuries.      In  this  country  there 

is  the  greatest  possible  difference.  All  of  the 
INTEREST.       cash  used  by  a  bank   in   the   United   States  is 

really  money  to  the  bank — that  is,  it  costs  the 
loss  of  interest  to  carry  it  idle.     So  far  as  this  idle  cash  is 


BANKIISfG  LAW  OF  CANADA.  19 

necessary  as  a  reserve  the  loss  of  interest  should  be  borne, 
but  to  the  extent  that  it  is  necessary  only  as  machinery  for 
paying  cheques  or  other  change-making  purposes,  it  is,  in 
our  opinion,  a  wasteful  and  unscientific  system.  If  you  look 
at  the  figures  of  cash  held  by  the  Canadian  banks,  the 
amount  appears  wretchedly  small  in  proportion  to  the  lia- 
bilities. But,  as  a  matter  of  fact,  the  cash  there  shown  is 
only  the  gold  and  legal-tender  reserves  in  the  treasuries  and 
the  trifling  amount  of  gold  and  legal  tenders  kept  in  the 
tills  for  the  convenience  of  customers.  The  main  business 
of  making  payments  in  money  is  done  by  the  note  issues  of 
the  bank.  I  notice  that  it  takes  from  about 
$1,500,000  to  $2,000,000  of  our  notes  to  keep  ofthe^note 
the  tills  of  all  the  branch  offices  filled  with  cash,  issues  at  the 
This  has  the  advantage  of  costing  no  interest,  branches. 
and,  inasmuch  as  it  does  not  represent  a  liability  of  the  bank 
until  actually  issued,  it  does  not  show  in  our  published 
statements.  If  it  were  a  specially  secured  currency,  we 
would  at  the  moment  appear  as  having  issued  about  the 
$4,000,000  we  are  entitled  to  under  law,  and  as  holding 
$1,500,000  to  $2,000,000  of  this  same  money  in  cash  in 
our  tills." 


SECURITY. 

I  desire  now  to  dwell  for  a  moment,  and  in  conclusion, 
upon  the  two  most  important  features  of  any  currency, 
namely:    the  features  of  Security  and  of  Elas-    twoimpor- 

,  ,  TANT  FEAT- 

ticity  ;    and  to  see  how  tar    and  how  perfectly  ures. 

they  exist  in  the  Canadian  system.  We  have  found  that  for 
security  the  Canadian  bank  note  has,  first,  the  entire  amount 
of  the  assets  of  the  bank  ;  second,  the  double  liability  of  the 
stockholder ;  and,  third,  the  Bank  Circulation   Redemption 


20  THE  CURRENCY  AND  THE 

Fund.     This  redemption   fund  will  average  something  be- 
tween a  million  and  a  half  and  two  million  dollars.     It  is 
sufficient  to  say  that  in  no  failure  which  Canada 

SECURITY. 

has  ever  had  under  the  present  system,  would 
one  dollar  of  this  fund  have  been  touched. 

In  a  letter  to  me  on  this  subject,   Mr.  George  Hague 
writes  : 


"  The  provision  making  notes  a  preferential  claim 
against  all  assets  came  into  force  some  years  ago,  and  it  has 
proved  itself  capable  of  standing  the  strongest  strain  that 
has  been  put  upon  it.  The  test  of  a  measure  like  this  is, 
of  course,  to  be  found  when  a  bank  which  has  been  ex- 
ceptionally badly  managed  stops  payment.      Now,  we  have 

had  three  instances  of  the  kind  during  the  last 
AND^TESTsi^^  tcn  years.      In   each  of  these  there  had  been 

the  most  scandalous  mismanagement  conceiva- 
ble, with  not  a  little  of  the  element  of  fraud.  Yet,  in  every 
instance,  the  notes  had  been  redeemed  in  full.  The  only 
loss  being  the  holding  of  them  for  a  shorter  or  longer  time. 
In  two  instances  the  notes  were  redeemed  within  one  or 
two  months.  In  the  other  instance,  which  was  by  far  the 
worst  of  the  three,  a  longer  delay  took  place. 

"  In  amending  the  Bank  Act  recently,  the  banks  volun- 
tarily proposed,  in  order  to  meet  any  possible  objection, 
and  to  make  assurance  doubly  sure,  to  provide  a  safety  fund 
to  be  contributed  to  by  all  the  banks  and  held  by  the  Govern- 
REDEMPTioN  "^^"t'  ^o  apply  to  the  redemption  of  notes.  The 
FUND  NOT  greater  part  of  the  banking  fraternity  considered 
NECESSARY,  this  entirely  unuccessary.  That  is  my  own  view. 
But  we  were  willing  to  go  as  far  as  possible,  to  meet  any 
possible  objection  to  the  continuance  of  our  circulation  on 
its  present  basis." 


BANKING  LAW  OF  CANADA.  21 

And  going  back  into  the  other  security — the  Assets  ; 
on  the  30th  of  September  of  this  year,  when  the  latest 
returns  of  the  Canadian  Chartered  Banks  was  published, 
the  latter  had  assets  with  the  double  liability  added  of 
$334,384,438  to  take  care  of  $34,083,051  circulation,  which 
means  an  average  of  $9.80  for  every  dollar  of  ^  startling 
circulation,    or    taking    the    case    of   the  lowest  fact. 

individual  percentage,  of  assets  to  circulation,  $5.00  back  of 
every  one  dollar  in  notes. 

Let  this  be  written  in  large  letters  :  EVERY  DOLLAR 
IN  CANADIAN  BANK  NOTES  HAS  OVER  NINE 
DOLLARS  (on  the  average)  IN  SECURITY  BACK 
OF  IT  TO  MAKE  IT  GOOD. 

AikI  yet  along  the  border,  two  or  three  years  ago,  an 
over-zealous  revenue  organization  succeeded  in  twisting  the 
ten  per  cent,  penalty  of  the  National  Bank  Act  against 
these  same  Canadian  notes,  giving  a  meaning  to  the  law 
which  it  has  been  conclusively  proved  it  never  was  intended 
to  have  by  the  broad  and  intelligent  framers  of  that  act, 
practically  banishing  the  Canadian  bills  from  the  useful 
position  which  they  had  occupied  as  furnishing  a  convenient 
and  absolutely  safe  medium  of  exchange  at  the  border 
between   two  friendly  nations. 

ELASTICITY. 

I  think  we  have  thoroughly  settled  the  question  of 
SECURITY.  But  let  a  currency  be  ever  so  secure,  if  it 
does  not  meet  the  requirements  of  trade,  if  it  has  no  elasticity. 


NATIONAL 
CURRENCY 
A  WAR 
MEASURE. 


22  THE  CURRENCY  AND  THE 

it  is  a  comparatively  dead  factor.  That,  unfortunately,  Is  the 
condition  to-day  of  our  own  national  bank  cur- 
rency. Its  issue  was  a  war  measure,  adopted 
for  the  purpose  of  placing  Government  loans, 
which  were  badly  needed,  and  paid  for  at  high  interest.  It 
did  certainly  once  for  all  wipe  out  the  wide-spread  evil  of 
the  wild-cat  issue  ;  but  it  was  a  war  measure,  born  out 
of  the  smoke  of  battle,  and  birth-marked  by  the  abnormal 
pressure  of  the  times.  It  fought  well,  it  did  its  duty 
grandly,  but  what  wonder  that  when  the  smoke  cleared 
away  and  the  piping  times  of  peace  came  again  and  we 
looked  at  it  with  calm,  deliberate  eye,  it  turned  out  to  be  a 
dwarfed  and  twisted  creature,  unfit  for  any  work  but  that  of 
war,  and  shrinking  away  into  uselessness  in  the 
sunlight  of  the  eternal  fitness  of  things.  The 
national  bank  currency  was  absolutely  secure.  It  was  profit- 
able to  the  banks  with  Government  bonds  at  a  high  rate  of 
interest.  But  it  had  no  elasticity.  Its  tendency,  because 
of  the  great  profit  in  it,  and  because  the  country  was  off  the 
specie  payment  basis,  and  there  was  no  pressure  to  redeem, 
was  towards  inflation,  and  a  limit  had  to  be  put  upon  it. 
Then  came  the  decrease  in  Government  interest  rates,  and 
currency  issue  became  unprofitable.  Shrinkage  followed. 
From  the  highest  point  of  $360,000,000,  towards  which  it 
ranged,  it  has  shrunken  down  now  in  the  last  ten  years  to 
$120,000,000,  and  left  a  great  gap  which  has,  in  turn, 
opened  the  way  to  a  great  danger. 


SHRINKAGE. 


BANKING  LA  W  OF  CANADA. 


23 


How  has  the  great  gap  left  by  the  shrinkage  of  the 
National  Currency  in  the  last  ten  years  from  $360,000,000 
to  $120,000,000  been  filled  ?  How  has  this  great  shrinkage 
been  met  when  the  currency  requirements  of  trade  have 
yearly  been  growing  greater  ?     Not  by  bringing 

,  ,  .  -  .  "  HOW  MET. 

to  bear  upon  the  question  the  greatest  wisdom 
and    skill  of  trained  financiers,    not  with  a  deliberate  con- 
sideration of  how  to  promote  the  best  interests  of  commerce 
on  a  scientific  basis.     It  has  been  met  by  Politics  and  not 
by   Science.     It  has  been  met  with    an   eye  to    ^„^„^,  ..^ 

•'  •'  THr*  POLITI- 

votes  and  the  spoils  and  much  indifference  as  to  ^^^^  ^ g'JJ^'^"^ 
what  might  be  the  greatest  good  to  the  greatest  miner. 

number.  It  has  been  met  by  the  Silver  Miner,  who  has 
hoisted  his  pickaxe  upon  his  shoulder  and  marched  to 
Washington  with  a  great  and  uproarious  following  of  rag- 
money  shouters  and  currency  doctors  and  misguided  western 
farmers,  and  many  honest  people  besides,  who,  knowing 
that  the  country  needed  currency,  and  with  half-formed 
ideas  of  bi-metallism,  have  with  the  others  and 

A  PALPABLE 

altogether  between  them  plunged  the  country  difference. 
in  the  last  few  years  into  a  wretched  slough  of  silver — a 
morass  of  three  hundred  and  fifty  millions  of  tokens  worth 
seventy-five  cents  on  the  dollar  ;  and  they  are  still  clamor- 
ing for  free  coinage,  and  after  that  they  will  want  free 
7)ioncy. 

And  so  nobody  claims  that  the  National  Bank  currency 
possesses  or  ever  did  possess  the  feature  of  elasticity.      It 


ELASTICITY. 


24  THE  CURRENCY  AND  THE 

was  an  expedient,  brilliant,  but  not  intended  to  be  scientific, 
hastening  towards  inflation  at  one  time,  excited  by  a  relish 
for  profit,  and  only  controlled  by  an  arbitrary  act  of  Con- 
gress, and  then,  with  the  profit  struck  out  of  it,  it  shrank  away 
steadily  without  any  reference  to  trade  requirements  at  all. 

We  have  left  a  splendid  organization  under  efficient  con- 
trol, ready  for  a  NEW  SYSTEM. 

On  the  other  hand,  let  us  turn  to  our  calm  friends,  the 
Canadians,  and  see  how  the  test  of  elasticity  is  met  by  their 
note-issues.  The  scientific  basis  of  elasticity  is 
this  :  There  must  be  some  iiiducement  or  force  for 
issue  which  will  operate  when  trade  requires  the  bank  notes, 
and  ceasing  to  operate  when  the  trade  requirement  ceases,  will 
extinguish  the  notes.  In  the  Canadian  system  the  inducing 
force  is  the  profit  on  notes  issued,  and  the  extinguishing 
power  is  the  desire  of  each  bank  to  float  its  own  issues. 
Here  let  me  once  more  refer  to  Mr.  Walker's  argument  for 
a  concise  statement  of  the  conditions  in  his  country.  He  says  : 

"In  Canada,  bank  notes  are  secured  by  a  first  lien  upon 
the  entire  assets  in  the  bank,  including  the  double  liability, 
the  security  being  general  and  not  special,  not  by  the  deposit 
of  Government  bonds,  for  instance.  Therefore,  it  is  clear 
that  it  will  always  pay  Canadian  banks  to  issue  currency 
when  trade  demands  it.  Because  bank  notes  in  Canada  are 
issued  against  the  general  estate  of  the  bank,  they  are  sub- 
ject to  daily,  actual  redemption  ;  and  no  bank  dares  to  issue 
EBB  AND  notes  without  reference  to  its  power  to  redeem, 
FLOW.  any  more  than  a  solvent  merchant  dares  to  give 

promissory  notes  without  reference  to   his  ability  to  pay. 


BANKING  LA  W  OF  CANADA.  25 

The  presentation  for  actual  redemption  of  every  note  not 
required  for  purposes  of  trade,  is  assured  by  the  fact  that 
every  bank  seeks,  by  the  activity  of  its  own  business,  to 
keep  out  its  own  notes  and,  therefore,  sends  back  daily  for 
redemption  the  notes  of  all  other  banks.  This  great  feature 
in  our  system  is  generally  overlooked,  but  it  is  daily 

because  of  this  daily  actual  redemption  that  we  redemption. 
have  never  had  any  serious  inflation  of  our  currency,  if 
indeed  there  ever  has  been  any  inflation  at  all.  Trade,  of 
course,  becomes  inflated,  and  the  currency  will  follow  trade, 
but  that  is  a  very  different  thing  from  the  existence  in  a 
country  of  a  great  volume  of  paper  money  not  required  by 
trade.  .  .  .  In  Canada  it  is  not  enough  that  the  volume 
of  currency  should  rise  and  fall  from  year  to  year  ;  it  must 
also,  for  about  eight  months  in  each  year,  keep  at  a  mini- 
mum (excluding  the  legal  tenders)  of  about  $30,000,000, 
and  for  about  two  months  of  the  remaining  four  sudden 

reach  $36,000,000  or  $37,000,000,  a  sudden  ad-'^^^J['^j^^!J° 
vance  of  20  per  cent,  followed  after  a  few  weeks  be  met. 

by  as  sudden  a  decline." 

And  quoting  again  from  Mr.  Hague's  letter  on  the  sub- 
ject of  whether  in  Canada  the  currency  is  always  sufficient 
to  care  for  the  Autumnal  Drain,  he  writes  : 

"  With  regard  to  the  matter  of  our  Canadian  circulation, 
experience  has  proven  that  the  feature  of  elasticity  is  com- 
pletely provided  for  and  that  our  currency  during  past  years 
has  shown  itself  capable  of  expansion  sufficient  for  the 
largest  demands  that  could  be  made  upon  it.  The  capital 
of  some  of  the  banks  is  so  large  that  they  have  never  circu- 
lated to  anything  near  the  amount  that  they  were  authorized 
by  law.  The  reserve  of  circulation  power  in  the  banks 
unitedly  is,  therefore,  considerably  in  excess  of  any  demand 
made  upon  it.      For  example  : 


26  THE  CURRENCY  AND  THE 

The  total  capital  of  the  banks  is $60,740,000 

The  highest  circulation  ever  reached  was        ....  38,000,000 

The  highest  expansion  during  any  fall  season  was  .         .         .  7,000,000 


So  you  will  see  it  has  never  been  necessary  to  issue  more 
than  about  60  per  cent,  of  the  amount  of  bank  notes  author- 
THE  AUTUMN  ized  by  law.  Panics  for  fear  of  stringency  are 
SQUEEZE.  thus  unknown.  The  Canadians  never  know 
what  it  is  to  go  through  an  American  money-squeeze  in  the 
autumn. 

So  much  for  the  feature  of  ELASTICITY. 

I  have  endeavored  to  show  how  scientific,  how  com- 
pletely filling  all  the  requirements  of  the  community  in 
which  it  exists  and  flourishes,  is  the  Canadian  bank  and  note 
system,  and  now,  naturally,  you  ask  me  whether  I  advocate 
the  adoption  of  this  system  in  the  United  States.  I  have 
simply  to  say  in  reply  that  I  am  not  here  to  advocate  any 
system.     Every  thinking'  banker  who  has  paid  any 

CONCLUSION.       ^  . 

attention  to  the  subject,  knows  that  our  present 
system  of  currency  is  inadequate,  and  our  condition  in  this 
regard  very  unsatisfactory,  uncomfortable,  and  I  think  I  may 
say  dangerous.  I  believe  it  to  be  a  time  for  reconstruction, 
not  by  politicians,  but  by  the  most  skilled  economic  wisdom 
which  we  can  call  to  our  aid.  In  such  a  time,  a  deliberate 
consideration  of  the  better  systems  in  operation  should  do 
some  good.  I  think  I  have  shown  that  such  a  system,  and 
one  of  the  best  in  the  world,  is  in  successful  operation  very 
near  us,  under  conditions  very  nearly  resembling  our  own. 


BANKING  LAW  OF  CANADA.  27 

its  arteries  stretching  over  a  vast  country  and  carrying  the 
life  blood  of  commerce  to  hamlet  and  town  and  metropolis, 
building-  up  worthy  enterprises,  and  furthering  and  sustain- 
ing a  healthy  prosperity  among  the  sturdy  people  of  our 
sister  nation,  Canada. 


THE  BANKING  ACT  OF 
THE  DOMINION  OF  CANADA,    1891, 


29 


THE  BANKING  ACT 

OF 

THE  DOMINION  OF  CANADA. 

1891. 

53  VICTORIA. 

CHAP.   31. 

An  Act  respecting  Banks  and  Banking. 

{^Assented  to  i6th  May,  iSpo.] 

TLT  ER  Majesty,  by  and  with  the  advice  and  consent  of  the  Senate 
and  House  of  Commons  of  Canada,  enacts  as  follows  : 

SHORT    TITLE. 
SHORT  TITLE.         L  This  Act  may  be  cited  as  "  T/ie  Bank  Act." 

INTERPRETATION. 

iNTERPRETA-  ^*  ^"^   ^^^'^  h.Q.\.,  unless  the    context  otherwise   re- 

TiON.  quires, — 

(a.)  The  expression  "  the  bank  "  means  any  bank  to  which  this 
"  THE  BANK."    Act  appHcs ; 

{b^  The  expression  "  Treasury  Board  "  means  the  board  pro- 
"  TREASURY  vidcd  for  by  section  nine  of  chapter  twenty-eight  of 
BOARD."  |-j^g  Revised  Statutes  of  Canada,  or  any  Act  in  amend- 

ment thereof  or  substitution  therefor  ; 

30 


BANKING  LAW  OF  CANADA.  31 

(r.)  The  expression  "  goods,  wares  and  merchandise  "  includes,  in 
addition  to  the  things  usually  understood  thereby,  tim-  "goods, 

ber,  deals,  boards,  staves,  saw-logs  and  other  lumber,  merchan- 
petroleum,  crude  oil,  and  all  agricultural    produce  and  uise." 

other  articles  of  commerce  ; 

(^,)  The  expression  "  warehouse  receipt "  means  any  receipt 
given  by  any  person  for  any  goods,  wares,  or  merchandise,  in  his 
actual,  visible    and    continued    possession,  as    bailee 

,.  ,,.,  ,x.fi--  i.  "VVAREHOUSE 

thereof,  m  good  faith,  and  not  as  of  his  own  property,  receipt." 

and  includes  receipts  given  by  any  person  who  is  the 
owner  or  keeper  of  a  harbor,  cove,  pond,  wharf,  yard,  warehouse, 
shed,  storehouse  or  other  place  for  the  storage  of  goods,  wares  or 
merchandise,  for  goods,  wares  and  merchandise  delivered  to  him  as 
bailee  and  actually  in  the  place,  or  in  one  or  more  of  the  places 
owned  or  kept  by  him,  whether  such  person  is  engaged  in  other 
business  or  not ; 

(r.)  The  expression  "  bill  of  lading "  includes  all  receipts  for 
goods,  wares  or  merchandise,  accompanied  by  an  undertaking  to 
transport    the  same  from  the  place  where  they  were 

•         1  .1  1  1      i.1-  u         1        J  "BILLOFLAD- 

received   to   some   other   place,   whether  by   land    or  jj^.q,, 

water,  or  partly   by  land  and  partly  by  water,  and  by 
any  mode  of  carriage  whatever  ; 

(/.)  The  word  "  manufacturer  "  includes  maltsters,  distillers, 
brewers,  refiners  and  producers  of  petroleum,  tanners,  curers,  packers, 
canners  of  meat,  pork,  fish,  fruit  or  vegetables,  and  any  manufac- 
person  who  produces  by  hand,  art,  process  or  mechani-  turer. 

cal  means  any  goods,  wares  or  merchandise.^ 
Ari'LICATION     OF   ACT. 

3.  The  provisions  of  this  Act  apply  to  the  several  banks  enu- 
merated in  Schedule  A  to  this  Act,  and  to  every  bank  incorporated 
after  the  first  day  of  January,  in  the  year  one  thousand 
eight  hundred  and    ninety,  whether  this   Act  is   spe-         Ji?^^"^!E 

o  -^  '  ^       BANkSTHEACT 

cially  mentioned  in  its  Act  of  incorporation  or  not,  but  applies. 

not  to  any  other  bank,  except  as  hereinafter  specially 
provided. 


32  THE  CURRENCY  AND  THE 

4.  The  charters  or  Acts  of  incorporation,  and  any  Acts  in  amend- 
ment thereof,  of  the  several  banks  enumerated  in  Schedule  A  to  this 

Act  are  continued  in  force,  so  far  as  regards  the  incor- 
CHARTERSCON-pQi-ation  and  corporate  name,  the  amount  of  capital 
JULY,  1901.     '    stock,  the  amount  of  each  share  of  such  stock  and  the 

chief  place  of  business  of  each  bank,  until  the  first  day 
of  July,  in  the  year  one  thousand  nine  hundred  and  one,  subject 
to  the  right  of  each  bank  to  increase  or  reduce  its  capital  stock  in  the 

manner  hereinafter  provided  ;  and  as  to  all  other  par- 
PARTicuLARS  ticulars  this  Act  shall  form  and  be  the  charter  of  each 

of  the  said  banks  until  the  said  first  day  of  July,  in  the 
year  one  thousand  nine  hundred  and  one, — subject  in  the  case  of 
La  Banque  du  Peuple  to  the  provisions  hereinafter  made  in  respect 

to  that  bank  :  Provided  always,  that  the  said  charters 
forfSture^^^''  ^^'^^  °^  incorporation  are  hereby  continued  in  force 

only  in  so  far  as  they,  or  any  of  them,  are  not  forfeited 
or  rendered  void  under  the  terms  thereof,  or  of  this  Act,  or  of  any 
other  Act  passed  or  to  be  passed,  by  reason  of  the  non-performance 
of  the  conditions  thereof,  or  by  insolvency,  or  otherwise. 

5.  All   the  provisions  of  this  Act,    except  those  contained  in 

sections  three,  six  to  seventeen  (both  inclusive),  nine- 
sioNs  shaS!"  teen  to  twenty-seven  (both  inclusive),  thirty-three,  forty- 
APPLY  TO  LA  five,  and  eighty-nine  to  ninety-six  (both  inclusive), 
peuplS  °^  ^PPly  to  La  Banque  du  Peuple :  Provided,  that  wher- 
ever the  word  "  directors  "  is  used  in  any  of  the  sections 
which  apply  to  the  said  bank,  it  shall  be  read  and  construed  as 
PROVISO:  AS  TO  meaning  the  principal  partners  or  members  of  the  cor- 
DiRECTORS.  poration  of  the  said  bank;  and  so  much  of  the  Act 
incorporating  the  said  bank,  or  of  any  Act  amending  or  continuing 
it,  as  is  inconsistent  with  any  section  of  this  Act  apply- 
iNCONSiSTENT  j^g  to  the  Said  bank,  or  which  makes  any  provision  in 

ENACTMENTS  ^  •  ,      ,     r        ,  1  .-..1.^1. 

REPEALED.        any  matter  provided   for  by  such  sections  other  than 
such  as  is  hereby  made,  is  hereby  repealed  ;  otherwise 
the  said  Acts  are  continued  in  force,  subject  to  the  proviso  contained 
in  section  four  of  this  Act. 


BANKING  LAW  OF  CANADA.  33 

6.  The  provisions  contained  in  sections  two,  seven,  thirty-seven, 
forty-seven  to  eighty-eight  (both  inclusive),  and  ninety-  what  provi- 
seven  to  one  hundred  and  four  (both  inclusive),  apply  apply  to"the 
to  the  Bank  of  British  North  America  and  the  Bank  of  banks  of 

T>    ...    ,     ^     ,  ,   .  ,.       ,  ,    .  1  •    •  BRITISH  NORTH 

British  Columbia  respectively  ;  and  the  provisions  con-  America  and 
tained  in  the  other  sections  of  this  Act  do  not  apply  to  of  b.  c. 

the  said  banks. 

7.  For  the  purposes  of  the  several  sections  of  this  Act  made 
applicable  to  the  Bank  of  British  North  America  and  the  Bank  of 
British  Columbia,  the  chief  ofifice  of  the  Bank  of  British 

North  America  shall  be  the  of^ce  of  the  bank  at  Mon-     business  of 

treal,  in  the  Province  of  Quebec,  and  the  chief  ofifice  of  the  said 

banks 
the  Bank  of  British  Columbia  shall  be  the  office  of  the 

bank  at  Victoria,  in  the  Province  of  British  Columbia. 

8.  The  provisions  of  this  Act  may  be  extended  to  the  Mer- 
chants' Bank  of  Prince  Edward  Island  by  the  Treasury  Board,  upon 
the  application  of  the  directors  of  the  said  bank,  before 

the  expiration  of  the  present  charter  of  the  said  bank  ;  chants'' b^ank 
and  upon  publication  in  the  Canada  Gazette  of  the  ofp.  e.  i.  mav 
resolution  of  the  directors  applying  hereunder,  and  of  this  act. 
the  minute  of  the  Treasury  Board  thereon  allowing 
such  application,  the  provisions  of  this  Act  shall,  from  the  time 
named  in  such  minute,  or  if  there  is  no  time  named  therein,  from 
the  date  of  the  publication  thereof  in  the  Canada  Gazette,  apply 
to  the  said  bank ;  and  its  charter  and  Act  of  incorporation,  and 
any  Acts  in  amendment  thereof,  shall  thereupon  be  extended 
for  the  same  time  and  to  the  extent  as  if  the  name  of  the  said  bank 
had  been  included  in  Schedule  A  to  this  Act. 

INCORPORATION   AND   ORGANIZATION   OF    BANKS. 

9.  The  capital  stock  of  every  bank  hereafter  incorporated,  the 
name  of  the  bank,  the  place  where  its  chief  office  is  matters  to 
to  be  situate,  and  the  name  of  the  provisional  direc-  ^^  provided 

FOR  I\  SPK- 

tors  shall  be  declared  in  the  Act  of  incorporation  of         cial  act, 
every  such  bank  : 


34  THE  CURRENCY  AND  THE 

2.  An  Act  of  incorporation  of  a  bank  in  the  form  set  forth  in 

FORM  OF  ACT   Schcdule  B  to  this  Act  shall  be  construed  to  confer 

OF  iNCORPO-     upon  the.  bank  thereby   incorporated  all   the  powers, 

privileges  and  immunities,  and    to    subject    it    to   all 

the  liabilities  and  provisions  set  forth  in  this  Act. 

10.  The  capital  stock  of  any  bank  hereafter  incorporated 
CAPITAL  shall  be  not  less  than  five  hundred  thousand  dollars, 

STOCK  AND 

SHARES.  and  shall  be  divided  into  shares  of  one  hundred 

dollars  each. 

11.  The  number  of  provisional  directors  shall  be  not  less  than 
PROVISIONAL  f^ve  nor  more  than  ten,  and  they  shall  hold  office  until 
DIRECTORS,  directors  are  elected  by  the  subscribers  to  the  stock,  as 
hereinafter  provided. 

12.  For  the  purpose  of  organizing  the  bank,  the  provisional 
directors  may  cause  stock  books  to  be  opened,  after  giving  public 
OPENING  OF  notice  thereof, — upon  which  stock  books  shall  be  re- 
STOCK  BOOKS,  cordcd  the  subscriptions  of  such  persons  as  desire  to 
become  shareholders  in  the  bank  ;  and  such  books  shall  be  opened 
at  the  place  where  the  chief  office  of  the  bank  is  to  be  situate,  and 
elsewhere,  in  the  discretion  of  the  provisional  directors,  and  may  be 
kept  open  for  such  time  as  they  deem  necessary. 

13.  So  soon  as  a  sum  not  less  than  five  hundred  thousand  dollars 
of  the  capital  stock  of  the  bank  has  been  bond  fide  subscribed, 
^^„^^.„„_  and  a  sum  not  less  than  two  hundred  and  fifty  thou- 
iNG  OF  SUB-  sand  dollars  thereof  has  been  paid  to  the  Minister 
scRiBERS.  q£  Finance  and  Receiver  General,  the  provisional 
directors  may,  by  public  notice,  published  for  at  least  four  weeks, 
call  a  meeting  of  the  subscribers  to  the  said  stock,  to 

NOTICE 

be  held  in  the  place  named  in  the  Act  of  incorporation 
as  the  chief  place  of  business  of  the  bank,  at  such  time  and  at  such 
place  therein  as  set  forth  in  the  said  notice  ;  at  which  meeting  the 
subscribers  shall  determine  the  day  upon  which  the  annual  general 
ELECTION  OF  meeting  of  the  bank  is  to  be  held,  and  shall  elect  such 
DIRECTORS.       number  of  directors,    duly   qualified    under  this    Act, 


BANKING  LAW  OF  CANADA.  35 

not  less  than  five  nor  more  than  ten,  as  they  think  necessary,  who 
shall  hold  office  until  the  annual  general  meeting  in  the  year  next 
succeeding  their  election  ;  and  upon  the  election  of  directors  as 
aforesaid  the  functions  of  the  provisional  directors  shall  cease. 

14.  The  bank  shall  not  issue  notes  nor  commence  the  business 
of  banking  until  it  has  obtained  from  the  Treasury  Board  a  certifi- 
cate permitting  it  to  do  so,  and  no  application  for  such      conditions 

certificate   shall    be  made   until   directors   have    been    previous  to 

,  ,       ,  ,       .,  ,  ,    •      ,  commencing 

elected  by  the  subscribers  to  the  stock  in  the  manner     business  by 

hereinbefore  provided  ;  and  every  director,  provisional      ^^^  banks. 

director,  or  other  person,  issuing  or  authorizing  the   issue  of  the 

notes  of   such  bank  or   transacting   or  authorizing  the  transaction 

of  any  business  in  connection  with  such  bank,  except  such  as  is 

hereinbefore  provided,  before  the  obtaining  of  the  certificate  from 

the  Treasury  Board,  shall  be  guilty  of  an  offence  against  this  Act. 

15.  No  certificate  shall  be  given  by  the  Treasury  Board  until  it 
has  been  shown  to  the  satisfaction  of  the  Board,  by  affidavit  or 
otherwise,  that  all  the  requirements  of  this  Act  and  of  ,,,„^,,,  ^t-t,-,.,,. 

WritN  CERT  IF- 

the  special  Act  of  incorporation  of  the  bank,  as  to  the  icate  may 
payment  required  'to  be  made  to  the  Minister  of  ^e  granted. 
Finance  and  Receiver  General,  the  election  of  directors,  deposit  for 
security  for  note  issue,  or  otherwise,  have  been  complied  with,  and 
that  the  sum  so  paid  was  then  held  by  the  Minister  of  Finance  and 
Receiver  General  ;  and  no  certificate  as  aforesaid  shall  be  given 
except  within  one  year  from  the  passing  of  the  Act  of  incorpora- 
tion of  the  bank  applying  for  the  said  certificate. 

16.  In  the  event  of  the  bank  not  obtaining  a  certificate  from 
the  Treasury  Board  within  one  year  from  the  time  of  the  passing 
of  its  Act  of  incorporation,  all  the  rights,  powers  and  jp  certifi- 
privileges  conferred  on  such  bank  by  its  Act  of  incor-  c.\te  is  not 
poration  shall  thereupon  cease  and  determine  and  be  granted. 
of  no  force  and  effect  whatever. 

17-  Upon  the  issue  of  the  certificate  in  manner  hereinbefore 
provided,  the  Minister  of  Finance  and  Receiver  General  shall  forth- 


S6  THE  CURRENCY  AND   THE 

with  pay  to  the  bank  the  amount  of  money  so  de- 
AMOUNT^DE>  posited  with  him  as  aforesaid,  without  interest,  after 
POSITED  WITH  deducting  therefrom  the  amount  required  to  be  de- 
FiNANCE  posited  under  section   fifty-four  of   this   Act  ;   and  in 

case  no  certificate  is  issued  by  the  Treasury  Board 
within  the  time  Hmited  for  the  issue  thereof,  the  amount  so  de- 
posited shall  be  returned  to  the  person  depositing  the  same  ;  but  in 
no  case  shall  the  Minister  of  Finance  and  Receiver  General  be 
under  any  obligation  to  see  to  the  proper  apphcation  of  the  same 
in  anyway. 

INTERNAL   REGULATIONS. 

l8.  The  shareholders  of  the  bank  (or,  in  the  case  of  La  Banque 
du  Peuple,  the  principal  partners  or  members  of  the  corporation 
BY-LAWS  MAY  thcrcof,)  may  regulate,  by  by-law,  the  following  matters 
BE  MADE.  incident  to  the  management  and  administration  of  the 

affairs  of  the  bank,  that  is  to  say  :  The  day  upon  which  the  annual 
general  meeting  of  the  shareholders  for  the  election  of  directors 
shall  be  held ;  the  record  to  be  kept  of  proxies,  and  the  time,  not 
exceeding  thirty  days,  within  which  proxies  must  be  produced 
and  recorded  prior  to  a  meeting  in  order  to  entitle  the  hplder  to 
vote  thereon  ;  the  number  of  the  directors,  which  shall  not  be  less 
than  five  and  not  more  than  ten,  and  the  quorum  thereof,  which 
shall  not  be  less  than  three  ;  their  qualification,  subject  to  the  pro- 
visions hereinafter  made ;  the  method  of  filling  vacancies  in  the 
board  of  directors  whenever  the  same  occur  during  each  year,  and 
the  time  and  proceedings  for  the  election  of  directors,  in  case  of  a 
failure  of  any  election  on  the  day  appointed  for 'it ;  the  remunera- 
tion of  the  president,  vice-president  and  other  directors;  and  the 
amount  of  discounts  or  loans  which  may  be  made  to  directors, 
either  jointly  or  severally,  or  to  any  one  firm  or  person,  or  to  any 
shareholder,  or  to  corporations  : 

2.  The  shareholders  may  authorize  the  directors  to  establish 
GUARANTEE  guarantee  and  pension  funds  for  the  officers  and 
AND  PENSION  employces  of  the  bank  and  their  families,  and  to 

FUNDS 

contribute  thereto  out  of  the  funds  of  the  bank  : 


BANKING  LA  W  OF  CANADA.  37 

3.  Until  it  is  otherwise  prescribed  by  by-law  under  this  section, 
the  by-laws  of  the  bank  on  any  matter  which  may  be  regulated  by 
by-laws  under  this  section  shall  remain  in  force,  except  certain  by- 
as  to  any  provision  fixing  the  qualification  of  direc-  lawscon- 
tors  at  an  amount  less  than   that  prescribed  by  this 

Act ;  and  no  person  shall  be  elected  or  continue  to  be  a  director 
unless  he  holds  stock  paid  up  to  the  amount  required  by  this  Act, 
or  such  greater  amount  as  is  required  by  any  by-law  in  that  behalf : 

4.  The  foregoing  provisions  of  this  section,  touching  directors, 
shall  not  apply  to  La  Banque  du  Peuple,  which  shall  banquedu 
in  these  matters  be  governed  by  the  provisions  of  its  ^^^epted' 
charter. 

19.  The  stock,  property,  affairs  and  concerns  of  the  bank  shall  be 
managed  by  a  board  of  directors,  who  shall  be  elected  board  of 
annually  in  manner  hereinafter  provided,  and  shall  be  directors. 
eligible  for  re-election  : 

2.  Each  director  shall  hold  capital  stock  of  the  bank  as  follows  : 
— When  the  paid-up  capital  stock  is  one  million  dollars  or  less,  each 
director  shall  hold  stock  on  which  not  less  than  three  qualifica- 
thousand  dollars  has  been  paid  up  ;  when  the  paid-up  tion. 

capital  stock  is  over  one  million  dollars  and  does  not  exceed  three 
million  dollars,  each  director  shall  hold  stock  on  which  not  less  than 
four  thousand  dollars  has  been  paid  up  ;  and  when  the  paid-up  capi- 
tal stock  exceeds  three  million  dollars,  each  director  shall  hold  stock 
on  which  not  less  than  five  thousand  dollars  has  been  paid  up : 

x.  A  majority  of  the  directors  shall  be  natural-born    m.\jority  to 

,•        ,         .   •  f  TT         ti;t     •  BE  BRITISH 

or  naturalized  subjects  of  Her  Majesty.  subjects. 

4.  The  directors  shall  be  elected  by  the  shareholders  on  such 

day  in  each  year  as  is  appointed  by  the  charter  or  by  any  by-law 

of  the  bank,  and  such  election  shall  take  place  at  the 

,     /v-         ,,,,  ,.  r    ^      ■,  1  election. 

head  office  of  the  bank  at  such  time  of  the  day  as  the 

directors  appoint ;  and  public  notice  thereof   shall  be  given  by  the 

directors,  by   publishing   the  same    for    at    least   four 

.  ,       .  ,,    ,  ,.  ,     ,      .        .  notice. 

weeks  previous  to  the  time  of  holding  such  election,  in  a 

newspaper  published  at  the  place  where  the  said  head  oflficc  is  situate  : 


38  THE  CURRENCY  AND  THE 

5.  The  persons,  to  the  number  authorized  to  be  elected,  who 
WHO  SHALL       have  the  greatest  number  of  votes  at  any  election,  shall 

BE  DIREC-  ... 

TORS.  be  directors  : 

6.  If  it  happens  at  any  election  that  two  oi"  more  persons  have 
PROVISION  IN  ^'^  equal  number  of  votes  and  the  election  or  non-elec- 
CASE  OF  tion  of  one  or  more  of  such  persons  as  a  director  or 
VOTES.              directors  depends  on  such  equality,  then  the  directors 

who  have  a  greater  number,  or  the  majority  of  them, 
shall  determine  which  of  the  said  persons  so  having  an  equal  num- 
ELECTioN  OF  ^^''  ^^  votes  shall  be  the  director  or  directors,  so  as  to 
PRESIDENT,  complete  the  full  number ;  and  the  said  directors,  as 
^'^'^'  soon  as  may  be,  after  the  said  election,  shall  proceed 

to  elect,  by  ballot,  two  of  their  number  to  be  president  and  vice- 
president  respectively  : 

7.  If  a  vacancy  occurs  in   the  board  of  directors,  such  vacancy 
shall  be  filled  in  the  manner  provided  by  the  by-laws ;  but  the  non- 
filling  of  the  vacancy  shall  not    vitiate  the  acts  of   a 

HOW^FiLLED  quorum  of  the  remaining  directors  ;  and  if  the  vacancy 
so  created  is  in  the  office  of  the  president  or  vice-presi- 
dent, the  directors  shall,  from  among  themselves,  elect  a  president 
or  vice-president,  who  shall  continue  in  office  for  the  remainder  of 
the  year. 

20.  If  an    election    of   directors    is  not    made  on    the    day    ap- 

pointed for  that  purpose,  such    election    of    directors 

PROVISION  IN  .L    1  1  i-l  J  J-  .t       ^1 

CASE  OF  FAIL-  "^sy   take  place  on  any  other  day,    according  to  the 
URE  OF  by-laws  made  by  the  shareholders  in  that  behalf ;  and 

the  directors  then  in  ofifice  shall  remain  in  office  until  a 
new  election  is  made. 

21.  At  all  meetings  of  the  directors,  the  president,  or  in  his  ab- 

sence the  vice-president,  or  in  the  absence  of  both  of 
Dnm:TORS°^    them,  one  of  the  directors  present,  chosen  to  act  pro 

tempore,  shall  preside ;  and  the  president,  vice-presi- 
CASTiNG  VOTE  dent,  or  president /;'<? /i';«/^r^  so  presiding  shall  vote  as 
OF  PRESIDING  ^  director,  and  if  there  is  an  equal  division  on  any  ques- 

DIRECTOR.  .,,,,,  ^ 

tion  shall  also  have  a  casting  vote. 


BANKING  LA  W  OF  CANADA.  39 

22.  The  directors  may  make  by-laws  and  regulations  (not  re- 
pugnant to  the  provisions  of  this  Act  or  the  laws  of  Canada)  touch- 
ing the  management  and  disposition  of  the  stock, 
property,  affairs  and  concerns  of  the  bank,  and  touch-  power  of 
ing  the  duties  and  conduct  of  the  oflficers,  clerks  and  directors. 
servants  employed  therein,  and  all  such  other  matters  as  appertain 
to  the  business  of  a  bank:  Provided  always,  that  all  proviso-  as 
by-laws  of  the  bank  heretofore  lawfully  made  and  now  to  by-laws 
in  force,  in  regard  to  any  matter  respecting  which  the  "^  force. 
directors  may  make  by-laws  under  this  section  (including  any  by- 
laws for  establishing  guarantee  and  pension  funds  for  tlie  employees 
of  the  bank),  shall  remain  in  force  until  they  are  repealed  or  altered 
by  others  made  under  this  Act. 

23.  The  directors  may  appoint  as  many  officers,  clerks  and  ser- 
vants for  carrying  on  the  business  of  the  bank,  and  appointment 
with  such  salaries  and  allowances,  as  they  consider  of  officers, 
necessary,  and  they  may  also  appoint  a  director  or  ^'^'^' 
directors  for  any  branch  of  the  bank  : 

2.  Before  permitting  any  cashier,  officer,  clerk  or  servant  of  the 
bank  to  enter  upon  the  duties  of  his  office,  the  directors  shall  re- 
quire him  to  give  bond,  guarantee,  or  other  security  to  security  to 
the  satisfaction  of  the  directors,  for  the  due  and  faith-  be  given. 
ful  performance  of  his  duties. 

24.  The  directors  of  the  bank,  or  any  four  of  them, — or  any 
number  not  less  than  twenty-five  of  the  shareholders  of  the  bank, 
who  are  together  proprietors  of  at  least  one  tenth  of  special  gen- 
the  paid-up  capital  stock  of  the  bank,  by  themselves  eral  meet- 
or  by  their  proxies, — may,  at  any  time,  call  a  special 

general  meeting  of  the  shareholders,  to  be  held  at  their  usual  place 
of  meeting,  upon  giving  si.x  weeks'  previous  public  notice,  specify- 
ing in  such  notice  the  object  of  such  meeting: 

2.  If  the  object  of  any  such  special  general  meeting  is  to  con- 
sider the  proposed  removal  of  the  president  or  vice-president,  or  of 
a  director  of  the  bank,  for  maladministration  or  other  removal  of 
specified  and  apparently  just  cause,  and  if  a  majority  president, 
of  the  votes  of  the  shareholders  at  such    meeting  Js^^^'^ector.Etc. 


40  THE  CURRENCY  AND   THE 

given  for  such  removal,  a  director  to  replace  him  shall  be  elected  or 
appointed  in  the  manner  provided  by  the  by-laws  of  the  bank,  or 
if  there  are  no  by-laws  providing  therefor,  then  by  the 
TKm  ^^^^"  shareholders  at  such  meeting ;  and  if  it  is  the  presi- 
dent or  vice-president  who  is  removed,  his  office  shall 
be  filled  by  the  directors  in  the  manner  provided  in  case  of  a 
vacancy  occurring  in  the  office  of  president  or  vice-president. 

25.  Every  shareholder  shall,  on  all  occasions  on  which  the  votes 
of  the  shareholders  are  taken,  have  one  vote  for  each 

SHAREs^^  share  held  by  him  for  at  least  thirty  days  before  the 
time  of  meeting  ;  and  in  all  cases  when  the  votes  of  the 

BALLOT.  shareholders  are  taken,  the  voting  shall  be  by  ballot : 

2.  All   questions  proposed  for  the  consideration  of    the  share- 

holders shall  be  determined   by  the   majority    of  the 
DETERMINE.^  votcs  of  the  shareholders  present  in  person  or  repre- 
sented by  proxy ;  and  the  chairman  elected  to  preside 
at  any  such  meeting  of  the  shareholders  shall  vote  as  a 
yQ-pg  shareholder  only,  unless  there  is  a  tie, — in  which  case, 

except  as  to  the  election  of  a  director,  he  shall  have 
a  casting  vote  : 

3.  If  two   or   more  persons  are  joint  holders  of  shares,  any  one 

of  such  joint  holders  may  be  empowered,  by  letter  of 
AS  TO  JOINT     attorney  from  the  other  joint  holder  or  holders,  or  a 

HOLDERS  OF  •       v  r    i.u  ..  ..    ^1  -J       T,  A 

SHARES.  majority   of  them,    to   represent  the  said  shares,   and 

vote  accordingly : 

4.  Shareholders  may  vote  by  proxy,  but  no   person  other  than 
a  shareholder  eHgible  to  vote  shall   be   permitted  to  vote  or  act 

as  such  proxy,  and  no  manager,  cashier,  clerk,  or  other 
PROXIES.  subordinate  officer  of  the  bank  shall  vote  either  in  per- 

son or  by  proxy,  or  hold  a  proxy  for  that  purpose  : 

5.  No  appointment  of  a  proxy   to  vote   at  any  meeting  of  the 

shareholders  of  the  bank  shall  be  valid  for  that  pur- 
PROXIES^  °^    pose   unless  it   has  been   made  or  renewed   in  writing 

within  the  two  years  next  preceding  the  time  of  such 
meeting: 


BANKING  LA  IV  OF  CANADA.  41 

6.  No  shareholder  shall  vote,  either  in   person  or  by  proxy,  on 
any  question  proposed   for  the   consideration    of  the 
shareholders  of  the  bank  at  any  meeting  of  such  share-     cases  calS 
holders,  or  in  any  case  in  which  the  votes  of  the  share-  must  be  paid 
holders  of  the  bank  are  taken,  unless  he  has  paid  all  jj^q" 

calls  made  by  the  directors  which  are  then  due  and 
payable. 

CAPITAL    STOCK. 

26.  The  capital  stock  of  the  bank  may  be  increased  from  time  to 
time,  by  such  percentage  or  by  such  amount,  as  is  de-  increase  of 
termined  upon  by  by-law  passed  by  the  shareholders,  at  capital. 
the  annual  general  meeting,  or  at  any  special  general  meeting  called  for 
the  purpose  :  Provided  always,  that  no  such  by-law  shall  approval  of 
come  into  operation,  or  be  of  any  force  or  effect,  unless  treasury 
and  until  a  certificate  approving  thereof  has  been  issued  ^  ^^^' 
by  the  Treasury  Board. 

2.  No  such  certificate  shall  be  issued  by  the  Treasury  Board  un- 
less application  therefor  is  made  within  three  months  from  the  time 
of  the  passing  of  such  by-law,  nor  unless  it  appears  to  conditions 
the  satisfaction  of  the  Treasury  Board  that  a  copy  of  tion-^for^apI 
such  by-law,  together  with  notice  of  intention  to  apply  proval. 

for  such  certificate,  has  been  published  for  at  least  four  weeks  in  the 
Canada  Gazette,  and  in  one  or  more  newspapers  published  in  the 
place  where  the  chief  office  or  place  of  business  of  the  bank  is  situ- 
ate ;  nothing  herein  contained,  however,  shall  be  construed  to  pre- 
vent the  Treasury  Board  from  refusing  to  issue  such  certificate  if  it 
thinks  best  so  to  do. 

27.  Any  of  the  original  unsubscribed  capital  stock,  or  of  the  in- 
creased stock  of  the  bank,  shall,  when  the  directors  so  determine,  be 
allotted  to  the  then  shareholders  of  the  bank /"r^  ratd, 

•      ,-,,,,.  ,  "OW  STOCK 

and  at  such  rate  as  is  fixed  by  the  directors,  but  no  shall  be  al- 
fraction  of  a  share  shall  be  so  allotted  ;  provided  that  lotted. 

in  no  case  shall  a  rate  be  fixed  by  the  directors,  which  will  make  the 
premium  (if  any)  paid  or  payable  on  such  stock  so  allotted  exceed 
the  percentage  which  the  reserve  fund  of  the  bank  then  bears  to  the 


42  THE  CURRENCY  AND  THE 

paid-up  capital  stock  thereof ;  and  any  of  such  allotted  stock  which 
is  not  taken  up  by  the  shareholder  to  whom  such  allotment  has  been 
made,  within  six  months  from  the  time  when  notice  of  the  allotment 
was  mailed  to  his  address,  or  which  he  declines  to  accept,  may  be 
offered  for  subscription  to  the  public,  in  such  manner  and  on  such 
terms  as  the  directors  prescribe. 

28.  The  capital  stock  of  the  bank  may  be  reduced  by  by-law 
passed  by  the  shareholders  at  the  annual  general  meeting,  or  at  a 
CAPITAL  special  general  meeting  called  for  the  purpose  ;  but  no 

STOCK  MAY  BE  sucli  by-law  shall  come  into  operation  or  be  of  force 
or  effect  until  a  certificate  approving  thereof  has  been 
issued  by  the  Treasury  Board  : 

2.  No  such  certificate  shall  be  issued  by  the  Treasury  Board  un- 
less application  therefor  is  made  within  three  months  from  the  time 
CERTIFICATE    °^  ^^^  passing  of  the  by-law,  nor  unless  it  appears  to 
OF  TREASURY   the  Satisfaction  of  the  Board  that  the  shareholders  vot- 
ing for  such  by-law  represent  a  majority  in  value  of  all 

the  shares  then  issued  by  the  bank,  and  that  a  copy  of  the  by-law, 
together  with  notice  of  intention  to  apply  to  the  Treasury  Board  for 
the  issue  of  a  certificate  approving  thereof,  has  been  published  for 
at  least  four  weeks  in  the  Canada  Gazette,  and  in  one  or  more  news- 
papers published  in  the  place  where  the  chief  ofifice  or  place  of  busi- 
ness of  the  bank  is  situate  ;  nothing  herein  contained,  however,  shall 
be  construed  to  prevent  the  Treasury  Board  from  refusing  to  issue 
such  certificate  if  it  thinks  best  so  to  do : 

3.  In  addition  to  evidenceof  the  passing  of  the  by-law  and  the  pub- 
lication thereof  in  the  manner  above  provided,  statements  showing 

the  amount  of  stock  issued  and  the  number  of  share- 

STATEMENTS 

TO  BE  SUBMIT-  lioldcrs,  with  the  amount  of  stock  held  by  each,  repre- 
■^^^"  sented  at  such  meeting,  and  the  number  of  shareholders, 

with  the  amount  of  stock  held  by  each,  who  voted  for  such  by-law, 
and  also  full  statements  of  the  assets  and  liabilities  of  the  bank, 
together  with  a  statement  of  the  reasons  and  causes  why  such  reduc- 
tion is  sought,  shall  be  laid  before  the  Treasury  Board  at  the  time  of 
the  application  for  the  issue  of  a  certificate  approving  such  by-law. 


BANKING  LA  W  OF  CANADA.  43 

4.  The  passing  of  such  by-law,  and  any  reduction  of  the  capital 
stock  of  the  bank  thereunder,  shall  not,  in  any  way,  reduction 
diminish  or  interfere  with  the  liability  of  the  sharehold-^^"^  "^^  affect 

r      ,        ,         ,  ,  ,.  ,  r  ,  ■  r      LIABILITY  OF 

ers  of  the  bank  to  the  creditors  thereof  at  the  time  of  sharehold- 
the  issue  of  the  certificate  approving  such  by-law  :  ^^^• 

5.  If,  in  any  case,  legislation  is  sought  to  sanction  any  reduction 

of  the  capital  stock  of  any  bank,  a  copy  of  the  by-law  or  resolution 

passed  by  the  shareholders  in  regard  thereto,  together  if  legislation 

with  statements  similar  to  those  above  provided  to  be       is  asked  to 

'■  sanction  RE- 

laid  before  the  Treasury  Board,  shall  be  filed  with  the  duction. 

Minister  of  Finance  and  Receiver  General,  at  least  one  month  prior 
to  the  introduction  into  Parliament  of  the  Bill  relating  to  such  re- 
duction : 

6.  The  capital  shall  not  be  reduced  below  the  amount  of  two 

hundred  and  fifty  thousand  dollars  of  paid-uo  stock,    limit  to  re- 
■^  *^  *  duction. 

SHARES    AND    CALLS. 

29.  The  shares  of  the  capital  stock  of  the  bank  shall  be  personal 
estate,  and  shall  be  assignable  and  transferable  at  the  chief  place  of 
business  of  the  bank,  or  at  such  of  its  branches,  or  at  shares  and 
such  place  or  places  in  the  United  Kingdom,  or  in  any  transfer 
of  the  British  colonies  or  possessions,  and  according  to 

such  form,  and  subject  to  such  rules  and  regulations,  as  the  directors 
prescribe;  and  books  of  subscription  may  be  opened,  books  of  sub- 
and  the  dividends  accruing  on  any  shares  of  such  stock  scription. 
may  be  made  payable  at  any  of  the  places  aforesaid  ;  and  the  di- 
rectors may  appoint  such  agents  in  the  United  Kingdom,  or  in  any 
of  the  British  colonies  or  possessions,  for  the  purposes  of  this  sec- 
tion, as  they  deem  necessary. 

30.  The  shares  of  the  capital  stock  shall  be  paid  in  by  such  i:i- 
stalments  and  at  such  times  and  places  as  the  direc-  payment  of 
tors  appoint :  Provided  always,  that  the  directors  may  shares. 
cancel  any  subscription  for  any  share  unless  a  sum  equal  to  ten  per 
cent,  at  least  on  the  amount  subscribed  for  is  actually  proviso:  ten 
paid  at  the  time  of,  or  within  thirty  days  after,  the  ^\^p^|Q'^;g^.^ 
time  of  subscribing  ;    but  such  cancellation  shall  not        scription. 


44  THE  CURRENCY  AND   THE 

relieve  the  subscriber  from  his  habihty  to  creditors  in  the  event  of 
insolvency  as  hereinafter  provided. 

31.  The  directors  may  make  such  calls  of  money  from  the  sev- 
CALLSON  eral  shareholders  for  the  time  being,  upon  the  shares 
SHARES.  subscribed  for  by  them  respectively,  as  they  find 
necessary  : 

2.  Such  calls  shall  be  made  at  intervals  of   not  less  than  thirty 

TIME  OF  CALLS  days,  and  upon  notice  to  be  given  at  least  thirty  days 

prior  to  the  day  on  which  such  call  shall  be  payable ; 

LIMITATION,     ^j^^  j^Q  such  Call  shall  exceed  ten  per  cent,  of  each  share 

subscribed. 

32.  The  directors  may,  in  case  of  the  non-payment  of  any  call,  in 
RECOVERY  OF  the  Corporate  name  of  the  bank,  sue  for,  recover,  col- 
CALLS.  ]g(^^  ^j-ifj  gg|-  jj^  ^\  such  calls,  or  may  cause  and  declare 
such  shares  to  be  forfeited  to  the  bank. 

33.  If  any  shareholder  refuses  or  neglects  to  pay  any  instalment 
upon  his  shares  of  the  capital  stock  at  the  time  appointed  therefor, 
FORFEITURE  such  shareholder  shall  incur  a  penalty  to  the  use  of 
OF  SHARES        ^]-^g  bank  of  a  sum  of  money  equal  to  ten  per  cent,  on 

FOR  NON-PAY-  .  ,         ,  "^       ^    ,     . .      ,  V- 

MENT  OF  the  amount  of  such   shares ;  and   if  the  directors   de- 

CALLS.  clare  any  shares  to  be  forfeited  to  the  bank  they  shall, 

within  six  months  thereafter,  without  any  previous  formality  other 
than  thirty  days'  public  notice  of  their  intention  so  to  do,  sell  at 
SALE  IN  SUCH  public  auction  the  said  shares,  or  so  many  of  the  said 
^^^^-  shares  as  shall,  after  deducting  the  reasonable  expenses 

of  the  sale,  yield  a  sum  of  money  sufificient  to  pay  the  unpaid  in- 
stalments due  on  the  remainder  of  the  said  shares  and  the  amount 
of  penalties  incurred  upon  the  whole  ;  and  the  president  or  vice- 
AND  TRANS-  president,  manager  or  cashier  of  the  bank  shall  execute 
^^^-  the  transfer  to  the  purchaser  of  the  shares  so  sold  ;  and 

such  transfer  shall  be  as  valid  and  effectual  in  law  as  if  it  had  been 
executed  by  the  original  holder  of  the  shares  thereby  transferred;  but 
PROVISO  '^^^  directors,  or  the  shareholders  at  a  general  meeting, 

may, notwithstanding  anything  in  this  section  contained, 


BANKING  LA  ]V  OF  CANADA.  45 

remit,  either  in  whole  or  in  part,  and  conditionally  or  uncondition- 
ally, any  forfeiture  or  penalty  incurred  by  the  non-payment  of  instal- 
ments as  aforesaid,  or  the  bank  may  enforce  the  payment  of  any 
call  or  calls  by  suit,  instead  of  declaring  the  shares  forfeited. 

34.  In  any  action  brought  to  recover  any  money  due  on  any 
such  call  it  shall  not  be  necessary  to  set  forth  the  special  matter  in 
the  declaration  or  statement  of  claim,  but  it  shall  be  recovery  by 
sufficient  to  allege  that  the  defendant  is  holder  of  one  ^^'^'^• 
share  or  more,  as  the  case  may  be,  in  the  capital  stock     what  only 

J  ^  ^  NEED  BE 

of  the  bank,  and  is  indebted  to  the  bank  for  a  call  or  proved. 

calls  upon  such  share  or  shares,  in  the  sum  to  which  the  call  or  calls 
amount,  as  the  case  may  be,  stating  the  amount  and  number  of  such 
calls,  whereby  an  action  has  accrued  to  the  bank  to  recover  the  same 
from  such  defendant  by  virtue  of  this  Act ;  and  it  shall  not  be  neces- 
sary to  prove  the  appointment  of  the  directors. 

TRANSFER  AND   TRANSMISSION   OF   SHARES. 

35.  No  assignment  or  transfer  of  the  shares  of  the  capital  stock 
of  the  bank  shall  be  valid  unless  it  is  made  and  registered  and  ac- 
cepted by  the  person  to  whom  the  transfer  is  made,  conditions 
in  a  book  or  books  kept  for  that  purpose,  nor  unless  of  transfer 
the  person  making  the  same  has,  if  required  by  the 

bank,  previously  discharged  all  his  debts  or  liabilities  to  the  bank 

which  exceed  in  amount  the  remaining  stock,  if  any,  belonging  to 

such  person,  valued  at  the  then  current  rate ;  and  no    fraction  of 

fractional  part  of  a  share,  or  less  than  a  whole  share,       share  not 

,,,,.,,  ,      ,  ,  transfer- 

shall  be  assignable  or  transferable.  able. 

36.  A  list  of  all  transfers  of  shares  registered  each  day  in  the 

books  of  the  bank,  showing  the  parties  to  such  transfers  and  the 

number   of   shares  transferred   in  each  case,  shall  be 

•  '  list  of  trans- 

made  up  at  the  end  of  each  day  and  kept  at  the  chief      fers  to  be 

place  of  business  of  the  bank,  for  the  inspection  of  its  kept. 

shareholders. 

37.  All  sales  or  transfers  of  shares,  and  all  contracts  and  agree- 
ments in  respect  thereof,  hereafter  made  or  purporting  to  be  made, 


46  THE  CURRENCY  AND   THE' 

TRANSFERRER  sliall  be  iiull  and  void  (saving  however,  as  to  a  pur- 
OF  SHARES        chaser  not  havin^  knowledge  of  the  defect,  his  rights 

MUST  BE  REG-  ^  r        i    \ 

iSTERED  OWN-  and  remedies  under  the  contract  of  sale),  unless  the  per- 
^^"  son  making  such  sale  or  transfer,  or  in  whose  name  or 

on  whose  behalf  the  same  is  made,  is  at  the  time  thereof  the  regis- 
tered owner  in  the  books  of  the  bank  of  the  share  or  shares  so  sold  or 
transferred,  or  intended  or  purported  so  to  be,  or  has  the  registered 
owner's  assent  to  the  sale,  and  the  distinguishing  number  or  num- 
bers of  such  share  or  shares,  if  any,  shall  be  designated  in  the  con- 
tract or  agreement  of  sale  or  transfer ;  and  any  person,  whether 
principal,  broker  or  agent,  who  violates  the  provisions  of  this  section 
by  wilfully  selling  or  transferring,  or  attempting  to  sell  or  transfer, 
any  share  or  shares  by  a  false  number,  or  of  which  the  principal  is 
not,  at  the  time  of  such  sale  or  attempted  sale,  the  registered  owner, 
or  acting  with  the  registered  owner's  assent  to  the  sale,  shall  be 
guilty  of  an  offence  against  this  Act. 

38.  When  any  share  of  the  capital  stock  has  been  sold  under  a 
writ  of  execution,  the  officer  by  whom  the  writ  was  executed,  shall, 
SALE  OF  within  thirty  days  after  the  sale,  leave  with  the  bank  an 
DER^xEcu-  attested  copy  of  the  writ,  with  the  certificate  of  such 
TiON.  officer  indorsed  thereon,  certifying  to  whom  the  sale 
has  been  made;  and  thereupon  (but  not  until  after  all  debts  and 
liabilities  of  the  holder  of  the  share  to  the  bank,  and  all  liens  exist- 
ing in  favor  of  the  bank  thereon,  have  been  discharged,  as  herein 
provided),  the  president,  vice-president,  manager  or  cashier  of  the 
bank  shall  execute  the  transfer  of  the  share  so  sold  to  the  purchaser  ; 
and  such  transfer  shall  be,  to  all  intents  and  purposes,  as  valid  and  ef- 
fectual in  law  as  if  it  had  been  executed  by  the  holder  of  the  said  share. 

39.  If  the  interest  in  any  share  in  the  capital  stock  becomes 
transmitted  in  consequence  of  the  death,  bankruptcy,  or  insolvency 
TRANSMISSION  of  any  shareholder,  or  in  consequence  of  the  marriage 
OTHERwis^E  °^  ^  female  shareholder,  or  by  any  other  lawful  means 
THAN  BY  than  by  a  transfer  according  to  the  provisions  of  this 
HOW  AUTHEN-  "^c^'  sucli  transmission  shall  be  authenticated  by  a 
TiCATED.  declaration  in  writing,  as  hereinafter  mentioned,  or  in 


BANKING  LAW  OF  CANADA.  47 

such  other  manner  as  the  directors  of  the  bank  require ;  and  every 
such  declaration  shall  distinctly  state  the  manner  in  which  and  the 
person  to  whom  such  shares  have  been  transmitted,  and  shall  be 
made  and  signed  by  such  person  ;  and  the  person  making  and  sign- 
ing such  declaration  shall  acknowledge  the  same  before  a  judge  of  a 
court  of  record,  or  before  the  mayor,  provost  or  chief  magistrate  of 
a  city,  town,  borough  or  other  place,  or  before  a  notary  public,  where 
the  same  is  made  and  signed  ;  and  every  declaration  so  signed  and 
acknowledged  shall  be  left  with  the  cashier,  manager  or  other  officer 
or  agent  of  the  bank,  who  shall  thereupon  enter  the  name  of  the  per- 
son entitled  under  such  transmission  in  the  register  of  shareholders; 
and  until  such  transmission  has  been  so  authenticated,  no  person 
claiming  by  virtue  of  any  such  transmission  shall  be  entitled  to  par- 
ticipate in  the  profits  of  the  bank,  or  to  vote  in  respect  of  any  such 
share  of  the  capital  stock  :  Provided  always,  that  every  such  declara- 
tion and  instrument  as,  by  this  and  the  next  following  proviso:  as 
section   of  this  Act,  are  required  to  perfect  the  trans-    "^'o  declara- 

,         ,         ,         ,  .   f     •  ,       •  TION  MADE 

mission  of  a  share  in  the  bank  which  is  made  in  any  out  of 

country  other  than  Canada,  or  any  other  British  colony,  Canada,  etc. 
or  the  United  Kingdom,  shall  be  further  authenticated  by  the  clerk 
of  a  court  of  record  and  under  the  seal  of  such  court,  or  by  the 
British  consul  or  vice-consul,  or  other  accredited  representative  of 
the  British  Government  in  the  country  where  the  declaration  is 
made,  or  shall  be  made    directly  before  such   British 

1  •  1  .u  K..    J  PROVISO  :  FUR- 

consul    or    vice-consul    or   other   accredited    represen-        ther  evi- 

tative :  and  provided  also,  that  the  directors,  cashier      dence  mav 
'  ^  ,    ,      ,      ,  .BE  required. 

or   other   officer   or  agent  of  the  bank    may  require 

corroborative  evidence  of  any  fact  alleged  in  any  such  declaration. 

40.  If  the  transmission  of  any  share  of  the  capital  stock  has 
taken  place  by  virtue  of  the  marriage  of  a  female  shareholder,  the 
declaration  shall  be  accompanied  by  a  copy  of  the  reg- transmission 
ister  of  such  marriage,  or  other  particulars  of  the  cele-  ^^'  marri.\ge 
bration  thereof,  and  shall  declare  the  identity  of  the  sh.\re- 

wifc  with  the  holder  of  such  share,  and  shall  be  made  holder. 

and  signed  by  such  female  shareholder  and  her  husband  ;  and  they 


48  THE  CURRENCY  AND  THE 

may  include  therein  a  declaration  to  the  effect  that  the  share  trans- 
mitted is  the  separate  property  and  under  the  sole  control  of  the 
wife,  and  that  she  may  receive  and  grant  receipts  for  the  dividends 
and  profits  accruing  in  respect  thereof,  and  dispose  of  and  transfer 
the  share  itself,  without  requiring  the  consent  or  authority  of  her 
husband  ;  and  such  declaration  shall  be  binding  upon  the  bank  and 
persons  making  the  same,  until  the  said  persons  see  fit  to  revoke  it 
by  a  written  notice  to  that  effect  to  the  bank  ;  but  the  omission  of 
a  statement  in  any  such  declaration  that  the  wife  making  the  same 
is  duly  authorized  by  her  husband  to  make  the  same  shall  not  in- 
validate the  declaration. 

41.  If  the  transmission  has  taken  place  by  virtue  of  any  testa- 
mentary instrument,  or  by  intestacy,  the  probate  of  the  will,  or  the 
TRANSMis  letters  of  administration,  or  act  of  curatorship  or  tutor- 
siON  BY  DE-  ship,  or  an  official  extract  therefrom,  shall,  together 
CEASE.  \v\\.\\  such  declaration,  be  produced  and  left  with  the 
cashier  or  other  officer  or  agent  of  the  bank,  who  shall,  thereupon, 
enter  in  the  register  of  shareholders  the  name  of  the  person  entitled 
under  such  transmission. 

42.  If  the  transmission  of  any  share  of  the  capital  stock  has 
taken  place  by  virtue  of  the  decease  of  any  shareholder,  the  pro- 
FURTHER  pRo-duction  to  the  directors  and  the  deposit  with  them  of 
VISION  IN         2SV  authentic  notarial  copy  of  the  will  of  the  deceased 

shareholder,  if  such  will  is  in  notarial  form  according 
to  the  law  of  the  Province  of  Quebec,  or  of  any  authenticated  copy 
of  the  probate  of  the  will  of  the  deceased  shareholder,  or  of  letters 
of  administration  of  his  estate,  or  of  letters  of  verification  of  heir- 
ship, or  of  the  act  of  curatorship  or  tutorship,  granted  by  any  court 
in  Canada  having  power  to  grant  the  same,  or  by  any  court  or  au- 
thority in  England,  Wales,  Ireland,  or  any  British  colony,  or  of  any 
testament  testamentary  or  testament  dative  expede  in  Scotland,  or, 
if  the  deceased  shareholder  died  out  of  Her  Majesty's  dominions, 
the  production  to  and  deposit  with  the  directors  of  any  authenti- 
cated copy  of  the  probate  of  his  will  or  letters  of  administration  of 
his  property,  or  other  document  of  like  import,  granted  by  any  court 


BANKING  LAW  OF  CANADA.  49 

or  authority  having  the  requisite  power  in  such  matters,  shall  be 
sufficient  justification  and  authority  to  the  directors  for  paying  any 
dividend,  or  for  transferring  or  authorizing  the  transfer  of  any  share, 
in  pursuance  of  and  in  conformity  to  such  probate,  letters  of  admin- 
istration, or  other  such  document  as  aforesaid. 

43.  The  bank  shall  not  be  bound  to  see  to  the  execution  of  any 
trust,  whether  express,  implied  or  constructive,  to  which  any  share 
of  its  stock  is  subject  ;  and  the  receipt  of  the  person  rank  no 
in  whose  name  any  such  share  stands  in  the  books  of  bound  to  see 
the  bank,  or,  if  it  stands  in  the  name  of  more  persons  ^^  trusts. 
than  one,  the  receipt  of  one  of  such  persons  shall  be  a  sufficient  dis- 
charge to  the  bank  for  any  dividend  or  any  other  sum  of  money 
payable  in  respect  of  such  share,  unless  express  notice  to  the  con- 
trary has  been  given  to  the  bank ;  and  the  bank  shall  not  be  bound  to 
see  to  the  application  of  the  money  paid  upon  such  receipt,  whether 
given  by  one  of  such  persons  or  all  of  them. 

44.  No  person  holding  stock  in  the  bank  as  executor,  admin- 
istrator, guardian  or  trustee,  of  or  for  any  person  named  in  the  books 
of  the  bank  as  being  so  represented  by  him,  shall  be  executors 
personally  subject  to  any  liability  as  a  shareholder,  but-^^^  "^^^^^ees 

NOT  PERSOV- 

the  estate  and  funds  in  his  hands  shall  be  liable  in  like  ally  liable. 
manner  and  to  the  same  extent  as  the  testator,  intestate,  ward  or 
person  interested  in  such  trust  fund  would  be,  if  living  and  compe- 
tent to  hold  the  stock  in  his  own  name  ;  and  if  the  trust  is  for  a 
living  person,  such  person  shall  also  himself  be  liable  as  a  share- 
holder ;  but  if  such  testator,  intestate,  ward  or  person  so  represented 

is  not  so  named  in  the  books  of  the  bank,  the  executor, 

J     •   •  4.    ^  J-  ....         1    11  u  11        exception. 

administrator,  guardian  or  trustee  shall  be  personally 

liable   in  respect  of  such  stock  as  if  he  held  it  in  his  own  name  as 

owner  thereof. 

ANNUAL    STATEMENT    AND    INSPECTION. 

45.  At  every  annual  meeting  of  the  shareholders  for  the  election 
of  directors,  the  out-going  directors  shall  submit  a  clearsTATEMENTTO 
and  full  statement  of  the  affairs  of  the  bank,  contain-      ^^  ^-"^'^  ^^- 

,  FORE  ANNUAL 

ing  on  the  one  part, —  meeting. 


50  THE  CURRENCY  AND  THE 

The  amount  of  the  capital  stock  paid  in,  the  amount  of  notes 

of  the  bank  in  circulation,  the  net  profits  made,  the 

balances  due  to  other  banks,  and  the  cash  deposited  in 

the  bank,  distinguishing  deposits  bearing  interest  from  those  not 

bearing  interest  ;  and  on  the  other  part, — 

The  amount  of  the  current  coin,  the  gold  and  silver  bullion,  and 
the  Dominion  notes  held  by  the  bank,  the  balances  due  to  the  bank 
from  other  banks,  the  value  of  the  real  and  other  prop- 
erty of  the  bank,  and  the  amount  of  debts  owing  to 
the  bank,  including  and  particularizing  the  amounts  so  owing  upon 
bills  of  exchange,  discounted  notes,  mortgages  and  other  securi- 
ties,— 

Exhibiting,  on  the  one  hand,  the  liabilities  of,  or  the  debts  due 
by  the  bank,  and  on  the  other  hand  the  assets  and  resources  there- 
WHAT  STATE-  of ;  and  the  said  statement  shall  also  exhibit  the  rate 
MENT  SHALL  ^nd  amount  of  the  last  dividend  declared  by  the  di- 
SHOw.  rectors,  the  amount  of  reserved  profits  at  the  date  of 

such  statement,  and  the  amount  of  debts  due  to  the  bank,  over-due 
and  not  paid,  with  an  estimate  of  the  loss  which  will  probably  ac- 
crue thereon. 

46.  The  books,  correspondence  and  funds  of  the  bank  shall,  at 
INSPECTION  OF  all  times,  be  subject  to  the  inspection  of  the  directors  ; 
BOOKS,  Etc.  ]-,y|-  j^q  persou,  who  is  not  a  director,  shall  be  allowed 
to  inspect  the  account  of  any  person  dealing  with  the  bank. 

DIVIDENDS. 

47.  The  directors  of  the  bank  shall,  subject  to  the  provisions  of 
this  Act,  declare  quarterly  or  half  yearly  dividends  of  so  much  of 

the  profits  of  the  bank  as  to  the  majority  of  them 
seems  advisable  ;  and  they  shall  give  at  least  thirty 
days'  public  notice  of  the  payment  of  such  dividends  previously  to 
the  date  fixed  for  such  payment ;  and  they  may  close  the  transfer 
books  during  a  certain  time,  not  exceeding  fifteen  days,  before  the 
payment  of  each  dividend. 


BANKING  LAW  OF  CANADA.  51 

48.  No  dividend  or  bonus  shall  ever  be  declared  so  as  to  impair 
the  paid-up  capital ;  and  if  any  dividend  or  bonus  is  so  declared  or 
made  payable,  the  directors  who  knowingly  and  ^il- j^j^.^j^^j^j^j^^^ 
fully  concur  therein  shall  be  jointly  and  severally  liable  to  impair 
for  the  amount  thereof  as  a  debt  due  by  them  to  the  capital. 
bank;  and  if  any  part  of  the  paid-up  capital  is  lost,  the  directors 
shall,  if  all  the  subscribed  stock  is  not  paid  up,  forthwith  make  calls 
upon  the  shareholders  to  an  amount  equivalent  to  such  capital  lost 
loss ;  and  such  loss  and  the  calls,  if  any,  shall  be  men-  to  be  made 
tioned  in  the  next  return  made  by  the  bank  to  the  ^^' 
Minister  of  Finance  and  Receiver  General :  Provided  that,  in  any 
case  in  which  the  capital  has  been  impaired  as  afore- 
said, all  net  profits  shall  be  applied  to  make  good  such 

loss. 

49.  No  division  of  profits,  either  by  way  of  dividends  or 
bonus,  or  both  combined,  or  in  any  other  vray,  exceeding  the 
rate  of  eight  per  cent,  per  annum,  shall  be  made  by  dividend 
the  bank,  unless,  after  making  the  same,  it  has  a  le^Js"  here  1*5 
rest  or  reserve  fund  equal  to  at  least  thirty  per  a  certain  re- 
cent.  of  its  paid-up  capital ;  and  all  bad  and  doubt-  serve. 
ful  debts  shall  be  deducted  before  the  amount  of  such  rest  is 
calculated. 

RESERVES. 

50.  The  bank  shall  hold  not  less  than  forty  per  cent,  of 
its  cash  reserves  in  Dominion  notes ;  and  every  part  of  re- 
bank  holding  at  any  time  a  less  amount  of  its  cash  ^^'domInion 
reserves  in  Dominion  notes  than  is  prescribed  by  notes. 
this  section  shall  incur  a  penalty  of  five  hundred  penalty  for 
dollars  for  each  and  every  violation  of  the  pro-  non-com- 
visions   of  this  section  :  pliance. 

2.  The  Minister  of  Finance  and  Receiver  General  shall 
make  such  arrangements  as  are  necessary  for  insuring  the  de- 
livery of  Dominion  notes  to  any  bank,  in  exchange  supply  of 
for  an  equivalent  amount  of  specie,  at  the  several  dominion 
offices  at  v/hich  Dominion  notes  are  redeemable,  in 
the  cities  of  Toronto,  Montreal,  Halifax,  St.  John,  N.  B.,  Winni- 


52  THE  CURRENCY  AND  THE 

peg,  Charlottetown  and  Victoria,  respectively  ;  and  such  notes 
shall  be  redeemable  at  the  office  for  redemption  of  Dominion 
notes  in  the  place  where  such  specie  is  given  in  exchange. 

NOTE   ISSUE. 

51.  The  bank  may  issue  and  re-issue  notes  payable  to 
bearer  on  demand  and  intended  for  circulation  ;  but  no  such 
AMOUNT  AND  "ote  shall  be  for  a  sum  less  than  five  dollars,  or  for 
DENOMiNA-  any  sum  which  is  not  a  multiple  of  five  dollars,  and 
NOTEs?^  ^^^^  ^^^  total  amount  of  such  notes,  in  circulation  at  any 
time,  shall  not  exceed  the  amount  of  the  unimpaired 
paid-up  capital  of  the  bank  : 

2.  Notwithstanding  anything  contained  in   the  next    preceding 
sub-section,  the  total  amount  of  such   notes  in   circulation   at   any 

time  of  La  Banque  du  Peuple  and  the  Bank  of  British 
BANQUE  DU  North  America  respectively  shall  not  exceed  seventy- 
BANK^OF^BRiT- ^^^  percent,  of  the  unimpaired  paid-up  capital  of  such 
ISH  NORTH        banks  respectively,  but  each  of  such  banks  may  issue 

such  notes  in  excess  of  the  said  seventy-five  per  cent, 
upon  depositing,  with  respect  to  such  excess,  with  the  Minister  of 
Finance  and  Receiver  General,  in  cash  or  bonds  of  the  Dominion  of 
Canada,  an  amount  equal  to  the  excess  ;  provided  always  that  in  no 
case  shall  the  total  amount  of  the  notes  of  either  of  the  said  banks 
in  circulation  at  any  time  exceed  the  unimpaired  paid-up  capital  of 
such  bank ;  and  the  cash  or  bonds  so  deposited  shall  be  available 
by  the  Minister  of  Finance  and  Receiver  General  for  the  redemption 
of  notes  issued  in  excess  as  aforesaid,  in  the  event  of  the  suspension 
of  the  said  banks  respectively  : 

3.  If  the  total  amount  of  the  notes  of  the  bank  in  circulation 
at  any  time  exceeds  the  amount  authorized  by  this  section, 
PENALTIES  the  bank  shall  incur  penalties  as  follows  :  If  the 
FOR  EXCESS  amount  of  such  excess  is  not  over  one  thousand 
Ti^oN^^^^^^  dollars,  a  penalty  equal  to  the  amount  of  such  ex- 
cess ;  if  the  amount  of  such  excess  is  over  one  thou- 
sand dollars  and  is  not  over  twenty  thousand  dollars,  a  penalty 
of  one  thousand  dollars  ;    if  the  amount   of    such   excess  is 


BANKING  LAW  OF  CANADA.  53 

over  twenty  thousand  dollars  and  is  not  over  one  hundred  thou- 
sand dollars,  a  penalty  of  ten  thousand  dollars;  if  the  amount 
of  such  excess  is  over  one  hundred  thousand  dollars  and  is  not 
over  two  hundred  thousand  dollars,  a  penalty  of  fifty  thousand 
dollars;  and  if  the  amount  of  such  excess  is  over  two  hundred 
thousand  dollars,  a  penalty  of  one  hundred  thousand  dollars  : 

4.  All  notes  heretofore  issued  or  re-issued  by  the  bank,  and  now 
in  circulation,  which  are  for  a  sum  less  than  five  dollars,  j^-qxes  under 
or  for  a  sum  which   is  not  a  multiple  of  five  dollars,  Istobe 

shall  be  called  in  and  cancelled  as  soon  as  practicable. 

52.  The  bank  shall  not  pledge,  assign,  or  hypothecate  its 
notes  ;  and  no  advance  or  loan  made  on  the  security  pledging  of 
of  the  notes  of  a  bank  shall  be  recoverable  from  the      notes  pro- 

,  ,  .^  ^  HIBITED. 

bank  or  its  assets  : 

2.  Every  person  who,  being  the  president,  vice-president, 
director,  principal  partner  en  coinnidudifCf  general  manager, 
manager,  cashier,  or  other  officer  of  the  bank,  penalty  for 
pledges,  assigns,  or  hypothecates,  or  authorizes,  or  pledging. 
is  concerned  in  the  pledge,  assignment  or  hypothecation  of  the 
notes  of  the  bank,  and  every  person  who  accepts,  receives  or 
takes,  or  authorizes  or  is  concerned  in  the  acceptance  or  receipt 
or  taking  of  such  notes  as  a  pledge,  assignment  or  hypotheca- 
tion, shall  be  liable  to  a  fine  of  not  less  than  four  hundred  dollars 
and  not  more  than  two  thousand  dollars,  or  to  imprisonment  for 
not  more  than  two  years,  or  to  both  : 

3.  Every  person  who,  being  the  president,  vice-president, 
director,  principal  partner  eti  coiiiinan(liff\  general  manager, 
manager,  cashier,  or  other  officer  of  a  bank,  with  penalty  for 
intent  to  defraud,  issues  or  delivers,  or  authorizes  *  improper 
or  is  concerned  in  the  issue  or  delivery  of  notes  of  Jn^g  of°noi-es" 
the  bank  intended  for  circulation  and  not  then  in 
circulation, — and  every  person  who,  with  knowledge  of  such 
intent,  accepts,  receives  or  takes,  or  authorizes  or  is  concerned 
in  the  acceptance,  receipt  or  taking  of  such  notes,— shall  be 
gfuilty  of  a  misdemeanor,  and  liable  to  imprisonment  for  a  term 
not  exceeding  seven  years,  or  to  a  fine  not  exceeding  two 
thousand  dollars,  or  to  both. 


54  THE  CURRENCY  AND  THE 

53.  The  payment  of  the  notes  issued  or  re-issued  by  the 
bank  and  intended  for  circulation,  and  then  in  circulation,  to- 
NOTESTo  BE  gather  with  any  interest  paid  or  payable  thereon  as 
FIRST  CHARGE  hereinafter  provided,  shall  be  the  first  charge  upon 
ON  ASSETS.  ^j^g  assets  of  the  bank  in  case  of  its  insolvency; 
and  the  payment  of  any  amount  due  to  the  Government  of 
Canada,  in  trust  or  otherwise,  shall  be  the  second  charge  upon 
such  assets ;  and  the  payment  of  any  amount  due  to  the  gov- 
ernment of  any  of  the  Provinces,  in  trust  or  otherwise,  shall 
be  the  third  charge  upon  such  assets  : 

2.  The  amount  of  any  penalties  for  which  the  bank  is  liable 
LIABILITY  FOR  shall  not  form  a  charge  upon  the  assets  of  such 
CASE  oF^^soL  bank,  in  case  of  its  insolvency,  until  all  other  liabil- 
VENCY.  ities  are  paid. 

54.  Every  bank  to  which  this  Act  applies,  and  which  is 
carrying  on  its  business  at  the  time  when  this  Act  comes  into 

force,  shall,  within  fifteen  days  thereafter,  pay  to 
BANKS  TO  the  Minister  of  Finance  and  Receiver  General,  a 
MAKE  DEPOSIT  sum  of  money  equal  to  two  and  one-half  percent,  of 

WITH  MINIS-       ^,  .        r    .^  i_         •  •  T    .L'  J 

TER  OF  the  average  amount  of  its  notes  m  circulation  dur- 

FiNANCE  ing  the  twelve  months  next  preceding  the  date  of 

FivEPE™cENT.the  comiug  into  force  of  this  Act,  or  if  such  bank 
OF  NOTE  ciR-  has  not  been  in  operation  for  twelve  months,  a  sum 
cuLATioN.  Qf  money  equal  to  two  and  one-half  per  cent,  of  the 
average  amount  of  its  notes  in  circulation  during  the  time  it 
has  been  in  operation ;  and  each  bank  shall,  within  fifteen  days 
from  and  after  the  first  day  of  July,  in  the  year  one  thousand 
eight  hundred  and  ninety-two,  pay  to  the  Minister  of  Finance 
and  Receiver  General  such  further  sum  of  money  as  is  neces- 
sary to  make  the  total  amount  so  paid  by  each  bank  to  be  a 
sum  equal  to  five  per  cent,  of  the  average  amount  of  its  notes  in 
circulation  during  the  twelve  months  next  preceding  the  date 
last  mentioned, — which  sum  shall  be  adjusted  annually  as  here- 
inafter provided : 

2,  The  Merchants'  Bank  of  Prince  Edward  Island  shall,  on  or 
before  the  day  upon  which  it  becomes  subject  to  the  provisions  of 
this  Act,  pay  to  the  Minister  of  Finance  and  Receiver  General  such 


BANKING  LA  W  OF  CANADA.  55 

sum  as  appears  to  the  satisfaction  of  the  Treasury  Board  to  be  equal 
to  two  and  one-half  per  cent,  of  the  average  amount  of  its  notes  in 
circulation  during  the  then  preceding  twelve  months  ;  ^g  ^^  ^^^^^ 
and  shall  further  pay  to  the  Minister  of  Finance  and  chants- bank 
Receiver  General,  within  fifteen  days  from  and  after 
the  first  day  of  July  in  the  year  then  next  following,  such  further 
sum  as  is  necessary  to  make  the  total  sum  paid  by  the  said  bank  to 
be  a  sum  equal  to  five  per  cent,  of  the  average  amount  of  its  notes 
in  circulation  from  the  time  the  said  bank  became  subject  to  the 
provisions  of  this  Act  to  the  said  first  day  of  July, — which  sum 
shall  be  adjusted  annually  as  hereinafter  provided  : 

3.  The  Minister  of  Finance  and  Receiver  General  shall, 
upon  the  issue  of  a  certificate  under  this  Act  authorizing  a  bank 
to  issue  notes  and  commence  the  business  of  bank-  as  to  new 
ing,  retain  out  of  any  moneys  of  such  bank  then  in  banks. 
his  possession  the  sum  of  five  thousand  dollars, — v^^hich  sum 
shall  be  held  for  the  purposes  of  this  section,  until  the  annual 
adjustment  hereunder  takes  place  in  the  year  then  next  follow- 
ing, at  which  time  the  amount  at  the  credit  of  the  bank  shall  be 
adjusted  by  payment  to  or  by  the  bank  of  such  sum  as  is  neces- 
sary to  make  the  amount  at  the  credit  of  the  bank  to  be  a  sum 
of  money  equal  to  five  per  cent,  of  the  average  amount  of  its 
notes  in  circulation  from  the  time  it  commenced  business  to  the 
time  of  such  adjustment, — which  sum  shall  be  adjusted  annually 
as  hereinafter  provided : 

4.  The  amounts  so  paid,  retained,  and  kept  on  deposit  as 
aforesaid  shall  form  a  fund  to  be  known  as  '*  The  Bank  Circula- 
tion Redemption  Fund,"— which  fund  shall  be  held  formation 
for  the  following  purpose,  and  for  no  other,  namely  :  of  circula- 
In  the  event  of  the  suspension  by  the  bank  of  pay-  ^^'Sion^fund" 
ment  in  specie  or  Dominion  notes  of  any  of  its  liabil- 
ities as  they  accrue,  for  the  payment  of  the  notes  then  issued  or 
reissued  by  such  bank,  and  intended  for  circulation,  and  then  in 
circulation,  and  interest  thereon  ;  and  the  Minister  of  Finance 
and  Receiver  General  shall,  with  respect  to  all  notes  paid  out 
of  the  said  fund,  have  the  same  rights  as  any  other  holder  of 
the  notes  of  the  bank: 


56  THE  CURRENCY  AND  THE 

5.  The  fund  shall  bear  interest  at  the  rate  of  three  per  cent, 
per  annum,  and  it  shall  be  adjusted,  as  soon  as  possible  after 
FUND  TO  ^^^  thirtieth  day  of  June  in  each  year,  in  such  a  way 
BEAR  INTER-  as  to  ttiakc  the  amount  at  the  credit  of  each  bank 
^'^^-  contributing  thereto,  unless  herein  otherwise  spe- 
cially provided,  equal  to  five  per  cent,  of  the  average  note  circula- 
tion of  such  bank  during  the  then  next  preceding  twelve  months : 

6.  The  average  note  circulation  of  a  bank  during  any  period 
shall  be  determined  from  the  average  of  the  amount  of  its  notes 
NOTE  ciRcu-  ^"  circulation,  as  shown  by  the  monthly  returns  for 
LATioN,  HOW  such  peHod  made  by  the  bank  to  the  Minister  of 
DETERMINED,  pinaucc  and  Receiver  General ;  and  where,  in  any 
return,  the  greatest  amount  of  notes  in  circulation  at  any  time 
during  the  month  is  given,  such  amount  shall,  for  the  purposes  of 
this  section,  be  taken  to  be  the  amount  of  the  notes  of  the  bank 
in  circulation  during  the  month  to  which  such  return  relates : 

7.  In  the  event  of  the  suspension  by  the  bank  of  payment  in 
specie  or  Dominion  notes  of  any  of  its  liabilities  as  they  accrue, 

the  notes  of  such  bank,  issued  or  reissued  and  in- 
NOTEs  OF  tended  for  circulation,  and  then  in  circulation,  shall 
PENDING  PAY-  bear  interest  at  the  rate  of  six  per  cent,  per  annum, 
MENT  TO  BEAR  from  the  day  of  such  suspension  to  such  day  as  is 
t^Jre!^^^  ^^'  named  by  the  directors,  or  by  the  liquidator,  re- 
DEEMED.  ceiver,  assignee  or  other  proper  official,  for  the  pay- 

ment thereof, — of  which  day  notice  shall  be  given  by 
advertisement  for  at  least  three  days  in  a  newspaper  published 
in  the  place  in  which  the  head  office  of  the  bank  is  situate ;  but 
in  case  any  notes  presented  for  payment  on  or  after  any  day 
named  for  payment  thereof  are  not  paid,  all  notes  then  unpaid 
and  in  circulation  shall  continue  to  bear  interest  to  such  further 
day  as  is  named  for  payment  thereof, — of  which  day  notice  shall 
be  given  in  manner  above  provided :  Provided   al- 

IFNOTRE-  ^,       ^   .  r  r    M  ^i_  i.      ri.u      J- 

DEEMED  TO  ways,  that  m  case  of  failure  on  the  part  of  the  direc- 
BE  PAID  OUT  tors  of  the  bank,  or  of  the  liquidator,  receiver, 
OF  FUND.  assignee  or  other  proper  official,  to  make  arrange- 
ments within  two  months  from  the  day  of  suspension  of  payment 
by  the  bank  as  aforesaid  for  the  payment  of  all  of  its  notes  and 
interest  thereon,  the  Minister  of  Finance  and  Receiver  General 


BANKING  LA  W  OF  CANADA.  57 

may  thereupon  make  arrangements  for  the  payment  of  the  notes 
remaining  unpaid,  and  all  interest  thereon,  out  of  the  said  fund, 
and  shall  give  such  notice  of  such  payment  as  he  thinks  expedi- 
ent, and  on  the  day  named  by  him  for  such  payment  all  interest 
on  such  notes  shall  cease,  anything  herein  contained  to  the  con- 
trary notwithstanding  ;  but  nothing  herein  con- 
tained shall  be  construed  to  impose  any  liability  on 
the  Government  of  Canada  or  on  the  Minister  of  Finance  and 
Receiver  General  beyond  the  amount  available  from  time  to  time 
out  of  the  said  fund  : 

8.  All  payments  made  from  the  said  fund  shall  be  without 
regard  to  the  amount  contributed  thereto  by  the  bank  in  respect 
of  whose  notes  the  payments  are  made  ;  and  in  case 

the  payments  from  the  fund  exceed  the  amount  from^'fund 
contributed  by  such  bank  to  the  fund,  and  all  to  be  with- 
interest  due  or  accruing  due  to  such  bank  thereon,    ^^J  regard 

^  TO  AMOUNT 

the  other  banks  shall,  on  demand,  make  good  to  contributed. 
the  fund  the  amount  of  such  excess,  pvo  r<(fa  to 
the  amount  which  each  bank  has  at  that  time  contributed  to  the 
fund  ;  and  all  amounts  recovered  and  received  by  the  Minister 
of  Finance  and  Receiver  General  from  the  bank  on  whose  ac- 
count such  payments  were  made  shall,  after  the  amount  of  such 
excess  has  been  made  good  as  aforesaid,  be  distributed  among 
the  banks  contributing  to  make  good  such  excess  i>i'0  rata  to 
the  amount  contributed  by  each  :  Provided  always, 
that  each  of  such  other  banks  shall  only  be  called 
upon  to  make  good  to  the  said  fund  its  share  of  such  excess,  in 
payments  not  exceeding  in  any  one  year  one  per  cent,  of  the 
average  amount  of  its  notes  in  circulation,— such  circulation  to 
be  ascertained  in  such  manner  as  the  Minister  of  Finance  and 
Receiver  General  decides  ;  and  his  decision  shall  be  final : 

9.  In  the  event  of  the  winding  up  of  the  business  of  a  bank 
by  reason  of  insolvency  or  otherwise,  the  Treasury  Board  may, 
on  the  application  of  the  directors,  or  of  the  liquida-  repayment 
tor,  receiver,  assignee  or  other  proper  official,  and  on  of  amount  if 
being  satisfied  that  proper  arrangements  have  been  woundVp^ 
made  for  the  payment  of  the  notes  of  the  bank  and 

any  interest  thereon,  pay  over  to  such  directors,  liquidator,  r^- 


58  THE  CURRENCY  AND  THE 

ceiver,  assignee  or  other  proper  official,  the  amount  at  the  credit 
of  the  bank,  or  such  portion  thereof  as  it  thinks  expedient : 

10.  The  Treasury  Board  may  make  all  such  rules  and  regula- 
tions as  it  thinks  expedient  with  reference  to  the  payment  of 

any  moneys  out  of  the  said  fund,  and  the  manner, 
BOARDMAY  pl^cc  aud  tlmc  of  such  payments,  the  collection  of 
REGULATE  all  amouuts  due  to  the  said  fund,  all  accounts  to  be 
OF  FUN™^^^  kept  in  connection  therewith,  and  generally  the 

management  of  the  said  fund  and  all  matters  relat- 
ing thereto : 

11.  The  Minister  of  Finance  and  Receiver  General  may,  in 
ENFORCE-  ^^^  official  name,  by  action  in  the  Exchequer  Court 
MENT  OF  PAY-  of  Canada  enforce  payment  (with  costs  of  action) 
MENT.  q£  g^jjy  gyj^  jjyg  ^j^^^  p ay ab 1 6  by  any  bank  under  the 
provisions  of  this  section. 

55.  The  bank  shall  make  such  arrangements  as  are  neces- 
sary to  ensure  the  circulation  at  par  in  any  and  every  part  of 

Canada  of  all  notes  issued  or  reissued  by  it  and 
BANK  To^BE  intended  for  circulation ;  and  towards  this  purpose 
PAYABLE  AT  the  bauk  shall  establish  agencies  for  the  redemption 
OUT  cInada""^"^  payment  of  its  notes  at  the  cities  of  Halifax,  St. 

John,  Charlottetown,  Montreal,  Toronto,  Winnipeg 
and  Victoria,  and  at  such  other  places  as  are,  from  time  to  time, 
designated  by  the  Treasury  Board. 

56.  The  bank  shall  always  receive  in  payment 
^^^™^"°^    its  own  notes  at  par   at  any   of  its  offices,  and 

OF  N01Jti.b. 

whether  they  are  made  payable  there  or  not : 
PAYABLE  AT  '^'  '^^^  chief  place  of  business  of  the  bank  shall 

CHIEF  PLACE    always  be  one  of  the  places  at  which  its  notes  are 

made  payable. 


OF  BUSINESS. 


57.   The  bank,  when  making  any  payment,  shall,  on  the 

request  of  the  person  to  whom  the  payment  is  to  be  made,  pay 

the  same,  or  such  part  thereof,  not  exceeding  one 

PAYMENTS  IN      t-jjjii  l  i_-      tn  • 

DOMINION        hundred  dollars,  as  such  person  requests,  m  Domm- 
NOTEs.  ion  notes  for  one,  two,  or  four  dollars  each,  at  the 


BANKING  LA  \V  OF  CANADA.  59 

Option   of  such  person :  Provided  always,  tliat  no 

payment,  whether  in  Dominion  notes  or  bank  notes,    torn  or  de- 

,       ,,   .  .       .       ,   .,,        ^.       ^  ^  1.-     11       J  FACED  NOTES. 

shall  be  made  m  bills  that  are  torn  or  partially  de- 
faced by  excessive  handling. 

58.  The  bonds,  obligations  and  bills,  obligatory  or  of  credit,  of 
the  bank  under  its  corporate  seal,  and  signed  by  the  president  or 
vice-president,  and  countersigned  by  a  cashier  or  assist- 

,  .  ...  J  ui       ^  BONDS,  NOTES, 

ant  cashier,  which  are  made  payable  to  any   person,  ^.^^    „Q^y  ^^-^ 
shall  be  assignable  by  indorsement  thereon  ;  and  bills    by  whom  to 

,      ,         ,         ,         .  ,     ,         ,,  •  ,       ^         •  BE  SIGNED. 

or  notes  of  the  bank  signed   by  the  president,  vice- 
president,  cashier  or  other  officer  appointed  by  the  directors  of  the 
bank  to  sign  the  same,  promising  the  payment  of  money  to  any 
person  or  to  his  order,  or  to  the  bearer,  though  not  under  the  cor- 
porate seal  of  the  bank,  shall  be  binding  and  obligatory  on  it  in  like 
manner  and  with  the  like  force  and  effect  as  they  would  be  upon 
any  private  person,  if  issued  by  him  in  his  private  or  natural  capac- 
ity, and  shall  be  assignable  in  like  manner  as  if  they  were  so  issued 
by  a  private  person  in  his  natural  capacity:  Provided 
always,  that  the  directors  of  the  bank  may,  from  time      pqwer^m^av 
to  time,  authorize,  or   depute    any   cashier,   assistant    be  deputed 
cashier,  or  officer  of  the  bank,  or  any  director  other 
than  the  president  or  vice-president,    or  any  cashier,  manager  or 
local  director  of  any  branch  or  oflRce  of  discount  and  deposit  of  the 
bank,  to  sign  the  notes  of  the  bank  intended  for  circulation. 

59.  All  bank  notes  and  bills  of  the  bank  whereon  the  name  of 
any  person  intrusted  or  authorized  to  sign  such  notes  or  bills  on 
behalf  of  the  bank  is  impressed  by  machinery  provided  ^^^^^  maybe 
for  that  purpose,  by  or  with  the  authority  of  the  bank,  signed  by 
shall  be  good  and  valid  to  all  intents  and  purposes  ^'^chinery. 
as  if  such  notes  and  bills  had  been  subscribed  in  the  proper  hand- 
writing of  the  person  intrusted  or  authorized  by  the  bank  to  sign 
the  same  respectively,  and  shall  be  bank  notes  and  bills  ^^^  sign\ 
within  the  meaning  of  all  laws  and  statutes  whatever,  ture  must  be 
and  may  be  described  as  bank  notes  or  bills  in  all  in-  ^^  kitten. 
dictmcnts  and  civil  or  criminal  proceedings  whatsoever  :   Provided 


6o  THE  CURRENCY  AND  THE 

always,  that  at  least  one  signature  to  each  note  or  bill  must  be  in  the 
actual  handwriting  of   a  person  authorized  to  sign  such  note  or  bill.' 

60.   Every  person,  except  a  bank  to  which  this  Act  applies,  who 
issues   or   reissues,  makes,  draws,  or  endorses  any  bill,  bond,  note, 

cheque  or  other  instrument,  intended  to  circulate  as 
UNAUTHOR?^  money,  or  to  be  used  as  a  substitute  for  money,  for 
ED  ISSUE  OF  any  amount  whatsoever,  shall  incur  a  penalty  of  four 
CIRCULATION,  hundred  dollars,  which  shall  be  recoverable  with  costs, 

in  any  court  of  competent  jurisdiction,  by  any  person 
who  sues  for  the  same  ;  and  a  moiety  of  such  penalty  shall  belong 
to  the  person  suing  for  the  same,  and  the  other  moiety  to  Her 
Majesty  for  the  public  uses  of  Canada: 

2.  The  intention  to  pass  any  such  instrument  as  money  shall  be 
presumed,  if  it  is  made  for  the  payment  of  a  less  sum  fhan  twenty 

dollars,  and  is  payable  either  in  form  or  in  fact  to  the 
WHAT  SHALL    bearer  thereof,  or  at  sight,  or  on  demand,  or  at  less 

BE  DEEMED  '  ,  .  .      . 

SUCH  NOTES,  than  thirty  days  thereafter,  or  is  overdue,  or  is  in  any 
way  calculated  or  designed  for  circulation,  or  as  a  sub- 
stitute for  money  ;  unless  such  instrument  is  a  cheque  on  some  char- 
tered bank  paid  by  the  maker  directly  to  his  immediate  creditor,  or 
a  promissory  note,  bill  of  exchange,  bond  or  other  undertaking  for 
the  payment  of  money,  paid  or  delivered  by  the  maker  thereof  to 
his  immediate  creditor,  and  is  not  designed  to  circulate  as  money  or 
as  a  substitute  for  money. 

61.  Every  person  who  in  any  way  defaces  any  Dominion  or 
Provincial  note,  or  bank  note,  whether  by  writing", 

OF  NOTEs^^^  printing,  drawing  or  stamping  thereon,  or  by  at- 
taching or  affixing  thereto,  anything  in  the  nature 

PENALTY.  or  form  of  an  advertisement,  shall  be  liable  to  a 
penalty  not  exceeding  twenty  dollars. 

62.  Every  officer  charged  with  the  receipt  or  disbursement  of 
COUNTERFEIT  public   moneys,    and   every  officer  of   any  bank,  and 

AND  FRAUDU-  .  1  j      1  1         1 

LENT  NOTES     cvcry   persou   acting  as  or  employed    by  any  banker, 
TO  BE  shall  stamp  or  write  in  plain  letters  the  word  "  counter- 

STAMPED  AS        ,.,,„,  ,,,  ,,  „ 

SUCH  feit,         altered,     or  "  worthless,    upon  every  counter- 


BANKING  LAW  OF  CANADA.  6i 

fcit  or  fraudulent  note  issued  in  the  form  of  a  Dominion  or  bank 
note,  and  intended  to  circulate  as  money,  which  is  presented  to 
him  at  his  place  of  business  ;  and  if  such  officer  or  person  wrong- 
fully stamps  any  genuine  note  he  shall,  upon  presentation,  redeem 
it  at  the  face  value  thereof. 

63.  Every  person  who  designs,  engraves,  prints  or  in  any  man- 
ner makes,   executes,  utters,   issues,   distributes,  circulates   or  uses 
any  business  or  professional  card,  notice,  placard,  cir- 
cular, hand-bill  or  advertisement    in    the  likeness  or^j°j.J°^|f^'^'^^ 
similitude  of  any  Dominion  or  bank  note,  or  any  ob-    be  issued  in 

1-        .-  -i.         r  r'  i.  f  u       1     THEFORMOFA 

ligation  or  security  of  any  Lrovernment,  or  of  any  bank,  note 

is  liable  to  a  penalty  of  one  hundred  dollars  or  to  three 
months'  imprisonment,  or  to  both. 

BUSINESS   AND   POWERS   OF   THE   BANK. 

64.  The  bank  may  open  branches,  agencies    and    offices, 
and  may  engage  in  and  carry  on  business  as  a  dealer  in  gold 
and  silver  coin  and  bullion,  and  it  may  deal  in,  dis- 
count, and  lend  money  and  make  advances  upon        branches 

i.u  -^  r  J  i.    1  11     i.  1  -i.     ANDAGENCIES. 

the  security  of,  and  may  take  as  collateral  security 

for  any  loan  made  by  it,  bills  of  exchange,  promis- general  pow- 

ERS  OF  BANK. 

sory  notes  and  other  negotiable  securities,  or  the 
stock,  bonds,  debentures  and  obligations  of  municipal  and 
other  corporations,  whether  secured  by  mortgage  or  otherwise, 
or  Dominion,  Provincial,  British,  foreign  and  other  public  se- 
curities, and  it  may  engage  in  and  carry  on  such  business  gen- 
erally as  appertains  to  the  business  of  banking;  but,  except 
as  authorized  by  this  Act,  it  shall  not,  either  di-  certain  busi- 
rectly  or  indirectly,  deal  in  the  buying,  or  selling,  ^^'^^^  ^^■'^^  ^'9^ 
or  bartering  of  goods,  wares  and  merchandise,  or  acted  by  the 
engage  or  be   engaged   in  any  trade  or  business  rank. 

whatsoever ;  and  it  shall  not,  either  directly  or  indirectly,  pur- 
chase, or  deal  in,  or  lend  money,  or  make  advances  upon  the 
security  or  pledge  of  any  share  of  its  own  capital  stock,  or  of 
the  capital  stock  of  any  bank ;  and  it  shall  not,  either  directly 
or  indirectly,  lend  money  or  make  advances  upon  the  security, 
mortgage,  or  hypothecation  of  any  land,  tenements,  or  immov- 


62  THE  CURRENCY  AND   THE 

able  property,  or  of  any  ships  or  other  vessels,  or  upon  the 
security  of  any  goods,  wares  and  merchandise. 

65.  The  bank  shall  have  a  privileged  lien,  for  any  debt  or  liabil- 

ity for  any  debt  to  the  bank,  on  the  shares  of  its  own 
BANK  TO  HAVE  capital  stock  and  on  any  unpaid  dividends  of  the  debtor 

LIENONDEBT-  i-    11  1  j       l-          i.          11  ^  r 

OR's  SHARES,  or  pcrson  liable,  and  may  decline  to  allow  any  transfer 
of  the  shares  of  such  debtor  or  person  until  such  debt 

is  paid ;  and  the  bank  shall,  within  twelve  months  after  such  debt 
has  accrued  and  become  payable,  sell  such  shares,  and 

SHARES.  notice  shall  be  given  to  the  holder  thereof  of  the  in- 

tention of  the  bank  to  sell  the  same,  by  mailing  such 
notice  in  the  post  office  to  the  last  known  address  of 

such  holder,  at  least  thirty  days  prior  to  such  sale ;  and  upon  such 
sale  being  made  the  president,  vice-president,  manager 

^fi^if  ^^^^AT^  or  cashier  shall  execute  a  transfer  of  such  shares  to  the 
purchaser  thereof  in   the   usual  transfer  book   of   the 

bank,  which  transfer  shall  vest  in  such  purchaser  all  the  rights  in  or 

to  such  shares  which  were  possessed  by  the  holder  thereof,  with  the 

same  obligation  of  warranty  on  his  part  as  if  he  were  the  vendor 

thereof,  but  without  any  warranty  from  the  bank  or  by  the  officer 

of  the  bank  executing  such  transfer. 

66.  The  stock,  bonds,  debentures  or  securities,  acquired  and  held 
by  the  bank  as  collateral  security,  may,  in  case  of  default  to  pay  the 
COLLATERAL  <^et)t,  for  sccuring  which  they  were  so  acquired  and 
SECURITIES  held,  be  dealt  with,  sold  and  conveyed  either  in  like 
LARLY  DEALT  manner  and  subject  to  the  same  restrictions  as  are 
WITH.  herein  provided  in  respect  of  stock  of  the  bank  on 
which  it  has  acquired  a  lien  under  this  Act,  or  in  like  manner  as 
and  subject  to  the  restrictions  under  which  a  private  individual 
might  in  like  circumstances  deal  with,  sell  and  convey  the  same,  but 
without  obligation  to  sell  the  same  within  twelve  months  : 

2.  The  right  so  to  deal  with  and  dispose  of  such  stock,  bonds, 
debentures  or  securities  in  manner  aforesaid  may  be  waived  or 
RIGHT  TO  DO  varied  by  any  agreement  between  the  bank  and  the 
fxpAil^X,^^         owner  of  such  stock,  bonds,  debentures  or  securities, 

WAIVED.  '  ' 


BANKING  LAW  OF  CANADA.  63 

made  at  the  time  at  which  such  debt  was  incurred,  or  if  the  time 
of  payment  of  such  debt  has  been  extended,  then  by  an  agreement 
made  at  the  time  of  such  extension. 

67.  The  bank  may  acquire  and  hold  real  and  immovable 
property  for  its  actual  use  and  occupation  and  the  kk\lkstate 
management  of  its  business,  and  may  sell  or  dis-  foroccupa- 
pose  of  the  same,  and  acquire  other  property  in  its  tion. 
stead  for  the  same  purpose. 

68.  The  bank  may  take,  hold  and  dispose  of  mortgages 
and  h  If  pot  Ju'( J  ues  u^on  real  or  personal,  immovable  or  movable 
property,  by  way  of   additional  security  for  debts     „^ 

,.,,,.,.,  J.    .         ,         .  MORTGAGES 

contracted  to  the  bank  m  the  course  of  its  busi-  asaddi- 

ness  ;  and  the  rights,  powers  and  privileges  which       tignal  se- 
the  bank  is  by  this  Act  declared  to  have  or  to  have 
had  in  respect  of  real  or  immovable  property  mortgaged  to  it, 
shall  be  held  and  possessed  by  it  in  respect  of  any  personal  or 
movable  property  which  is  mortgaged  or  hypothecated  to  it. 

69.  The  bank  may  purchase  any  lands  or  real  or  immovable  prop- 
erty offered  for  sale  under  execution,  or  in  insolvency,  or  under  the 
order  or  decree  of  a  court,  as  belonging  to  any  debtor 

to  the  bank,  or  offered  for  sale  by  a  mortgagee  or  other  land  under 
encumbrancer  having  priority  over  a  mortgage  or  execution, 
other  encumbrance  held  by  the  bank  or  offered  for 
sale  by  the  bank  under  a  power  of  sale  given  to  it  for  that  pur- 
pose, in  cases  in  which,  under  similar  circumstances,  an  individual 
could  so  purchase,  without  any  restriction  as  to  the  value  of  the 
property  which  it  may  so  purchase,  and  may  acquire  a  title  thereto 
as  any  individual  purchasing  at  sheriff's  sale,  or  under  a  power  of 
sale,  in  like  circumstances,  could  do,  and  may  take,  have,  hold  and 
dispose  of  the  same  at  pleasure. 

70.  The  bank  may  acquire  and  hold  an  absolute  title  in  or 
to  real  or  immovable  property  mortgaged  to  it  as  security  for  a 
debt  due  or  owing  to  it,  either  by  obtaining  a  re-  absolute 
lease  of  the  equity  of  redemption  in  the  mortgaged  title  may  be 
property,  or  by  procuring  a  foreclosure,  or  by  other  acquired. 
means  whereby,  as  between  individuals,  an  equity  of  redemp- 


64  THE  CURRENCY  AND  THE 

tion  can,  by  law,  be  barred,  and  may  purchase  and  acquire  any 
prior  mortgage  or  charge  on  such  property  :  Provided  always, 
PROVISO  •  SALE  ^^^^*^  no  bank  shall  hold  any  real  or  immovable 
OF  PROPERTY  property,  howsoever  acquired,  except  such  as  is 
so  ACQUIRED,  j-gquircd  for  its  own  use,  for  any  period  exceeding 
seven  years  from  the  date  of  the  acquisition  thereof. 

71.  Nothing  in  any  charter,  Act  or  law  shall  be  construed  as 
ever  having  prevented  or  as  preventing  the  bank  from  acquiring 
TITLE  TO  and  holding  an  absolute  title  to  and  in  any  such  mort- 
ACOumED  •  §^to^<^  ^^^^  o*"  immovable  property,  whatever  the  value 
POWER  OF  '  thereof  is,  or  from  exercising  or  acting  upon  any  power 
SALE,  Etc.  ^|-  ^^j^  contained  in  any  mortgage  given  to  it  or  held 
by  it,  authorizing  or  enabling  it  to  sell  or  convey  away  any  property 
so  mortgaged. 

72.  Every  bank  advancing  money  in  aid  of  the  building  of  any 
ship  or  vessel  shall  have  the  same  right  of  acquiring  and  holding 
ASTOADVAN-  sccurity  upon  such  ship  or  vessel,  while  building  and 
CES  FOR  BuiLD-when  completed,  either  by  way  of  mortgage,  hypotheque, 
iNG  SHIPS.  hypothecation,  privilege,  or  lien  thereon,  or  purchase 
or  transfer  thereof,  as  individuals  have  in  the  Province  wherein  such 
ship  or  vessel  is  being  built,  and  for  that  purpose  may  avail  itself 
of  all  such  rights  and  means  of  obtaining  and  enforcing  such  se- 
curity, and  shall  be  subject  to  all  such  obligations,  limitations  and 
conditions  as  are,  by  the  law  of  such  Province,  conferred  or  im- 
posed upon  individuals  making  such  advances. 

73.  The  bank  may  acquire  and  hold  any  warehouse  receipt  or 
bill  of  lading  as  collateral  security  for  the  payment  of  any  debt  in- 
WAREHOUSE  currcd  in  its  favor  in  the  course  of  its  banking  busi- 
BE  TAKEN  As^  "^^^ '  ^^^  ^^^  warchousc  receipt  or  bill  of  lading  so 
COLLATERAL  acqulrcd  shall  vest  in  the  bank,  from  the  date  of  the 
SECURITY.  acquisition  thereof,  all  the  right  and  title  of  the  previ- 
ous holder  or  owner  thereof,  or  of  the  person  from  whom  such  goods, 
wares  and  merchandise  were  received  or  acquired  by  the  bank,  if  the 
warehouse  receipt  or  bill  of  lading  is  made  directly  in  favor  of  the 


BANKING  LAW  OF  CANADA.  65 

bank,  instead  of  to  the  previous  holder  or  owner  of  such  goods, 
wares  and  merchandise : 

2.  If  the  previous  holder  of  such  warehouse  receipt  or  bill  of 
lading  is  the  agent  of  the  owner  of  the  goods,  wares  and  mer- 
chandise mentioned  therein,  the  bank  shall  be  vested  whenprevi- 
with  all  the  right  and  title  of  the  owner  thereof,  sub-  ous  holder 
ject  to  his  right  to  have  the  same  re-transferred  to  him,  ^'  ^  ^^^' 
if  the  debt,  as  security  for  which  they  are  held  by  the  bank,  is  paid  : 

3.  In  this  section  the  expression  "  agent  "  means  any  person  in- 
trusted with  the  possession  of  goods,  wares  and  merchandise,  or  to 
whom  the  same  are  consigned,  or  who  is  possessed  of  ixterpreta- 
any  bill  of  lading,  receipt,  order,  or  other  document  tionof 
used  in  the  course  of  business  as  proof  of  the  posses- 
sion or  control  of  goods,  wares  and  merchandise,  or  authorizing 
or  purporting  to  authorize,  either  by  indorsement  or  by  delivery, 
the  possessor  of  such  document  to  transfer  or  receive  the  goods, 
wares  and  merchandise  thereby  represented  ;  and  such  person  shall 
be  deemed  the  possessor  of  such  goods,  wares  and  merchandise,  bill 
of  lading,  receipt,  order,  or  other  document  as  aforesaid,  as  well  if 
the  same  are  held  by  any  person  for  him  or  subject  to  his  control 
as  if  he  is  in  actual  possession  thereof. 


74.  The  bank  may  lend  money  to  any  person  engaged  in  busi- 
ness as  a  wholesale  manufacturer  of  any  goods,  wares  loans  to 
and  merchandise,  upon  the  security  of  the  goods,  wares  ^^man?faJ 
and  merchandise  manufactured  by  him  or  procured  for  turers. 
such  manufacture : 

2.  The  bank  may  also  lend  money  to  any  wholesale  purchaser  or 
shipper  of  products  of  agriculture,  the  forest  and  mine, 

J.  11  J      •  ^  111  LOANS  TO  CER- 

or  the  sea,  lakes  and  rivers,  or  to  any  wholesale  pur-  tain  whole- 

chaser  or  shipper  of  live  stock  or  dead  stock,  and  the  ^^^-^  pur- 

,          .1          ,                ,               •         ,        ,           ,  chasers  or 

products  thereof,  upon  the  security  of  such  products,  shippers. 

or  of  such  live  stock  or  dead  stock,  and  the  products 
thereof : 

3.  Such  security  may  be  given  by  the  owner  and  may  be  taken 


66  THE  CURRENCY  AND  THE 

in  the  form  set  forth  in  Schedule  C  to  this  Act,  or  to  the  like  effect ; 
FORM  OF  and  by  virtue  of  such  security,  the  bank  shall  acquire 

SECURITY.  tj^g  same  rights  and  powers  in  respect  to  the  goods, 
wares  and  merchandise,  stock  or  products  covered  thereby,  as  if  it 
had  acquired  the  same  by  virtue  of  a  warehouse  receipt. 

75.  The  bank  shall  not  acquire  or  hold  any  warehouse  receipt  or 
bill  of  lading  or  security  under  the  next  preceding  section  to  secure 
WHEN  SUCH  ^^^  payment  of  any  bill,  note  or  debt,  unless  such  bill, 
SECURITY  MAY  note  or  debt  is  negotiated  or  contracted  at  the  time  of 
BE  ACQUIRED.  ^^^  acquisition  thereof  by  the  bank,  or  upon  the  written 
promise  or  agreement  that  such  warehouse  receipt  or  bill  of  lad- 
ing or  security  would  be  given  to  the  bank  ;  but  such  bill,  note  or 
debt  maybe  renewed,  or  the  time  for  the  payment  thereof  extended, 
without  affecting  any  such  security  : 

2.  The  bank  may,  on  shipment  of  any  goods,  wares  and  mer- 
chandise for  which  it  holds  a  warehouse  receipt,  or  security  as  afore- 
EXCHANGE  OF  ^^^^'  Surrender  such  receipt  or  security  and  receive  a 
WAREHOUSE  bill  of  lading  in  exchange  therefor,  or,  on  the  receipt 
BiLL^OF^Ai?  of  ^'^y  goods,  warcs  and  merchandise  for  which  it  holds 
iNGANDz-zv^  a  bill  of  lading  or  security,  as  aforesaid,  it  may  sur- 
^^^''"'  render  such  bill  of  lading  or  security,  store  such  goods, 
wares  and  merchandise,  and  take  a  warehouse  receipt  therefor, 
or  may  ship  them,  or  part  of  them,  and  take  another  bill  of  lading 
therefor : 

3.  Every  one  is  guilty  of  a  misdemeanor  and  liable  to  imprison- 
PENALTY  FOR  "^^nt  for  a  term  not  exceeding  two  years  who  wilfully 
MAKING  FALSE  makes  any  false  statement  in  any  warehouse  receipt, 
STATEMENT,     ^j^j  ^^  \^.^\n^  OX  sccurity,  as  aforesaid. 

4.  Every  one  is  guilty  of  a  misdemeanor  and  liable  to  imprison- 
ment for  a  term  not  exceeding  two  years,  who,  having  possession  or 

control  of  any  goods,  wares  and  merchandise  covered 

PENALTY  FOR    ,  /    '^  .    ^    ,  ...        .    ,      i- 

ALIENATING     by  any  warehouse  receipt,  bill  of  lading  or  security  as 

GOODS  so  aforesaid,  and  having  knowledge  of  such  receipt,  bill  of 

SECURED.  ,     , .  .  ^ ,       .  ,  r  .  1      ,       1      • 

lading  or  security,  and  without  consent  01  the  bank,  in 


w 


riting  and   before  the  advance,  bill,  note  or  debt  thereby  secured 


BANKING  LAW  OF  CANADA.  67 

has  been  fully  paid,  wilfully  alienates  or  parts  with  any  such  goods, 
wares,  or  merchandise,  or  wilfully  withholds  from  the  bank  posses- 
sion thereof  upon  demand  after  default  in  payment  of  such  advance, 
bill,  note  or  debt. 

76.  If  goods,  wares  and  merchandise  are  manufactured  or  pro- 
duced from  the  goods,  wares  and  merchandise,  or  any  of  them,  in- 
cluded in  or  covered  by  any  warehouse  receipt,  or  ^s  to  goods 
security  given  under  section  seventy-four  of  this  Act,        manufac- 

,   .,  ,       ,         ,         ,     1      ,  ,.  ,  1  TURED  FROM 

while  so  covered,  the  bank  holdmg  such  warehouse  re-  articles 
ceipt  or  security  shall  hold  or  continue  to  hold  such  pledged. 
goods,  wares  and  merchandise,  during  the  process  and  after  the  com- 
pletion of  such  manufacture  or  production,  with  the  same  right  and 
title  and  for  the  same  purposes  and  upon  the  same  conditions  as  it 
held  or  could  have  held  the  original  goods,  wares  and  merchandise. 

77'  All  advances  made  on  the  security  of  any  bill  of  lading  or 
warehouse  receipt,  or  security  given  under  section  seventy-four  of 
this  Act,  shall  give  to  the  bank  making  such  advances  prior  claim 
a  claim  for  the  repayment  of  such  advances  on  the  qver  unpaid 
goods,  wares  and   merchandise  therein  mentioned,  or  vendor. 

into  which  they  have  been  converted,  prior  to  and  by  preference 
over  the  claim  of  any  unpaid  vendor  ;  but  such  preference  shall  not 
be  given  over  the  claim  of  any  unpaid  vendor  who  had  a  lien  upon 
such  goods,  wares  and  merchandise  at  the  time  of  the  acquisition 
by  the  bank  of  such  warehouse  receipt,  bill  of  lading,  or  security, 
unless  the  same  was  acquired  without  knowledge  on  the  part  of  the 
bank  of  such  lien. 

78.  In  the  event  of  the  non-payment  at  maturity  of  any  debt 
secured  by  a  warehouse  receipt  or  bill  of  lading,  or  security  given 
under  section  seventy-four  of  this  Act,  the  bank  rnayg^j^^.  ^p  goods 
sell  the  goods,  wares  and  merchandise  mentioned  on  non-pay- 
therein,  or  so  much  thereof  as  will  suffice  to  pay  guch^'^^^*'^^^^^' 
debt  with  interest  and  expenses,  returning  the  overplus,  if  any,  to 
the  person  from  whom  such  warehouse  receipt,  or  bill  of  lading,  or 
security,  or   the  goods,  wares  and   merchandise  mentioned  therein, 


68  THE  CURRENCY  AND  THE 

as  the  case  may  be,  were  acquired  ;  but  such  power  of  sale  shall  be 
subject  to  the  following  provisions,  namely: 

2.  No  sale  without  the  consent  in  writing  of  the  owner  of  any 
timber,  boards,  deals,  staves,  saw-logs   or  other  lumber,  shall   be 

made  under  this  Act  until  notice  of  the  time  and  place 

NOTICE  TO  BE 

GIVEN  BEFORE  of  such  salc  has  been  given  by  a  registered  letter,  mailed 
SALE  OF  GOODSjj^  ^-j-^g  pQg^-  ofifice  to  the  last  known  address  of  the  pledger 

PLEDGED. 

thereof,  at  least  thirty  days  prior  to  the  sale  thereof ; 
and  no  goods,  wares  and  merchandise,  other  than  timber,  boards, 
deals,  staves,  saw-logs  or  other  lumber,  shall  be  sold  by  the  bank 
under  this  Act  without  the  consent  of  the  owner,  until  notice  of  the 
time  and  place  of  sale  has  been  given  by  a  registered  letter,  mailed 
in  the  post  office  to  the  last  known  address  of  the  pledger  thereof, 
at  least  ten  days  prior  to  the  sale  thereof : 

3.  Every  such  sale  of  any  article  mentioned  in  this  section, 
without  the  consent  of  the  owner,  shall  be  made  by  public  auction, 
SALE  BY  AUG-  ^^'^^^  ^  notice  thereof  by  advertisement,  stating  the 
TioN  AFTER  time  and  place  thereof,  in  at  least  two  newspapers  pub- 
NOTiCE.  lished  in  or  nearest  to  the  place  where  the  sale  is  to  be 
made  ;  and  if  such  sale  is  in  the  Province  of  Quebec,  then  at  least 
one  of  such  newspapers  shall  be  a  newspaper  published  in  the  Eng- 
lish language,  and  one  other  such  newspaper  shall  be  a  newspaper 
published  in  the  French  language. 

79.  Every  bank  which  violates  any  provision  contained  in  any  of 
PENALTY  FOR  ^^^  scctions  numbered  sixty-four  to  seventy-eight  (both 
coNTRAVEN-  inclusivc)  shall  incur  for  each  violation  thereof  a  pen- 
^^  ^'  alty  not  exceeding  five  hundred  dollars. 

80.  The  bank  shall  not  be  liable  to  incur  any  penalty  or  for- 
feiture for  usury,  and  may  stipulate  for,  take,  reserve  or  exact 
NO  PENALTY  auy  ratc  of  interest  or  discount  not  exceeding  seven 
FOR  USURY.  pgj.  cent,  per  annum,  and  may  receive  and  take  in 
advance  any  such  rate,  but  no  higher  rate  of  interest  shall  be 
WHAT  INTER-  Tecoverable  by  the  bank  ;  and  the  bank  may  allow 
EST  MAY  BE      any  rate  of  interest  whatever  upon  money  deposited 

ALLOWED.  ^-^^  it^ 


BANKING  LA  W  OF  CANADA,  69 

81.  No  promissory  note,  bill  of  exchange  or  other  negoti- 
able security,  discounted  by  or  indorsed  or  otherwise  assigned 
to  the  bank,  shall  be  held  to  be  void,  usurious  or 

NO  INSTRU- 

tainted  by  usury,  as  regards  such  bank,  or  any  AfENTTOBE 
maker,    drawer,    acceptor,    indorser,    or   indorsee  void  on 

thereof,  or  other  party  thereto,  or  hond  p<Je  holder  '  usury. 
thereof,  nor  shall  any  party  thereto  be  subject  to 
any  penalty  or  forfeiture  by  reason  of  any  rate  of  interest  taken, ' 
stipulated  or  received  by  such  bank,  on  or  with  respect  to  such 
promissory  note,  bill  of  exchange,  or  other  negotiable  security, 
or  paid  or  allowed  by  any  party  thereto  to  another  in  compen- 
sation for,  or  in  consideration  of  the  rate  of  interest  taken  or  to 
be  taken  thereon  by  such  bank  ;  but  no  party  thereto,  other  than 
the  bank,  shall  be  entitled  to  recover  or  liable  to  pay  more  than 
the  lawful  rate  of  interest  in  the  Province  where  the  suit  is 
brought,  nor  shall  the  bank  be  entitled  to  recover  a  higher  rate 
than  seven  per  cent,  per  annum  ;  and  no  innocent  holder  of  or 
party  to  any  promissory  note,  bill  of  exchange  or  astoinno- 
other  negotiable  security,  shall,  in  any  case  be  de-  centhold- 
prived  of  any  remedy  against  any  party  thereto,  or  ^^^• 

liable  to  any  penalty  or  forfeiture,  by  reason  of  any  usury  or  of- 
fence against  the  laws  of  any  such  Province,  respecting  interest, 
committed  in  respect  of  such  note,  bill  or  negotiable  security, 
without  the  complicity  or  consent  of  such  innocent  holder  or 
party. 

82.  The  bank  may,  in  discounting  at  any  of  its  places  of  busi- 
ness, branches,  agencies  or  offices  of  discount  and  deposit,  any 
note,  bill  or  other  negotiable  security  or  paper  payable  collection 
at  any  other  of  its  own  places  or  seats  of  business,  ^"^^s. 
branches,  agencies  or  offices  of  discount  and  deposit  in  Canada, 
receive  or  retain,  in  addition  to  the  discount,  any  amount  not  ex- 
ceeding the  following  rates  per  cent,  according  to  the  time  it  has 
to  run,  on  the  amount  of  such  note,  bill  or  other  negotiable  secur- 
ity or  paper,  to  defray  the  expenses  attending  the  collection  thereof, 
that  is  to  say :  under  thirty  days,  one-eighth  of  one  per  cent. ;  thirty 
days  or  over,  but  under  sixty  days,  one-fourth  of  one   per    cent.  ; 


70  THE  CURRENCY  AND  THE 

sixty  days  and  over,  but  under  ninety  days,  three-eights  of  one  per 
cent.  ;  ninety  days  and  over,  one-half  of  one  per  cent. 

83.  The  bank  may,  in  discounting  any  note,  bill  or  other  negoti- 
able security  or  paper,  bond  fide  payable  at  any  place  in  Canada 
AGENCY  FEES   ^^^^^^^^  from  that  at  which  it  is  discounted,  and  other 

than  one  of  its  own  places  or  seats  of  business, 
branches,  agencies  or  ofifices  of  discount  and  deposit  in  Canada,  re- 
ceive and  retain,  in  addition  to  the  discount  thereon,  a  sum  not  ex- 
ceeding one-half  of  one  per  cent,  on  the  amount  thereof,  to  defray 
the  expenses  of  agency  and  charges  in  collecting  the  same. 

84.  The  bank  may  receive  deposits  from  any  person  whomso- 
ever, whatever  his  age,  status  or  condition  in  life,  and  whether  such 

person  is  qualified  by  law  to  enter  into  ordinary  con- 
BE  RECEIVED  ^racts  or  not ;  and,  from  time  to  time,  may  repay  any 
FROM  PERSONS  or  all  of  the  principal  thereof,  and  may  pay  the  whole 

UNABLE  TO  ^       r     ^1         •    ^  ..    ^1  1  1 

CONTRACT.  ^^  ^"y  P^^t  of  the  mtcrcst  thereon  to  such  person, 
without  the  authority,  aid,  assistance  or  intervention 
of  any  person  or  ofificial  being  required,  unless  before  such  repay- 
ment the  money  so  deposited  in  and  repaid  by  the  bank  is  lawfully 
claimed  as  the  property  of  some  other  person,  in  which  case  it  may 
be  paid  to  the  depositor  with  the  consent  of  the  claimant,  or  to  the 
claimant  with  the  consent  of  the  depositor  :  Provided  always,  that  if 
the  person  making  any  such  deposit  could  not,  under 
PROVISO:  the  \■^^^  Qf  ^-]^g  Province  where  the  deposit  is  made, 

AMOUNT  LIM-       ,.,.,,  ^ 

iTED.  deposit  and  withdraw  money  in  and  from  a  bank  with- 

out this  section,  the  total  amount  to  be  received  from 

such  person  on   deposit  shall  not,  at  any  time,  exceed  the  sum  of 

five  hundred  dollars  : 

2.  The  bank  shall  not  be  bound  to  see  to  the  execution  of  any 

trust,  whether   expressed,  implied  or   constructive,  to    which   any 
deposit   made    under  the  authority  of  this  section  is 

BOUND  TO  SEE  ^ubjcct  ;  and  except  only  in  the  case  of  a  lawful  claim, 

TO  TRUSTS  IN  bv  some  other  person  before  repayment,  the  receipt  of 

RELATION  TO      .;  .  ,  1       1  -^      ^         , 

sucHDEPOSiTS.^"^  pcrson  in  whose  name  any  such  deposit  stands,  or 
if  it  stands  in  the  name  of  two  persons  the  receipt  of 


BANKING  LAW  OF  CANADA.  71 

one,  or  if  in  the  names  of  more  than  two  persons  the  receipt  of  a 
majority  of  such  persons,  shall  be  a  sufficient  discharge  to  all  con- 
cerned for  the  payment  of  any  money  payable  in  respect  of  such 
deposit,  notwithstanding  any  trust  to  which  such  deposit  is  then 
subject,  and  whether  or  not  the  bank  sought  to  be  charged  with 
such  trust  (and  with  whom  the  deposit  has  been  made)  had 
notice  thereof ;  and  the  bank  shall  not  be  bound  to  see  to  the 
application  of  the  money  paid  upon  such  receipt. 

RETURNS   BY  THE    BANK. 

85.  Monthly  returns  shall  be  made  by  the  bank  to  the 
Minister  of  Finance  and  Receiver  General  in  the  form  set  forth 
in  Schedule  D  to  this  Act,  and  shall  be  made  up 

and  sent  in  within  the  first  fifteen  days  of  each  ^JJ^^,^^,^^^^ 
month,  and  shall  exhibit  the  condition  of  the  bank  eknment. 
on  the  last  juridical  day  of  the  month  next  preced- 
ing ;  and  such  monthly  returns  shall  be  signed  by  the  chief 
accountant  and  by  the  president,  or  vice-president,  or  the  direc- 
tor or  principal  partner  then  acting  as  president,  and  by  the 
manager,  cashier  or  other  principal  officer  of  the  bank  at  its 
chief  place  of  business  : 

2.  Every  bank  which  neglects  to  make  up  and  send  in,  as 
aforesaid,  any  monthly  return  required  by  this  section  within 
the   time  hereby  limited,  shall  incur  a  penalty  of 
fifty  dollars  for  each  and  every  day  after  the  expira-  ^^f^!^^^,^J^ 

•  r  ••  A         •  A    •     \        *  \  \  r^Ol    MAKING 

tion  of  such  time  durmg  which  the  bank  neglects  so  up  monthly 
to  make  up  and  send  in  such  return  ;  and  the  date     returns  in 

u-    K     -i.  V.      <.^  ^      cc  i.  DUE  TIME. 

upon  which  it  appears  by  the  post  office  stamp  or 
mark  upon  the  envelope  or  wrapper  enclosing  such  return  for 
transmission  to  the  Minister  of  Finance  and  Receiver  General, 
that  the  same  was  deposited  in  the  post  office,  shall  be  taken 
prima  facie,  for  the  purposes  of  this  section,  to  be  the  date 
upon  which  such  return  was  made  up  and  sent  in. 

86.  The  Minister  of  Finance  and  Receiver  General  may 
also  call  for  special  returns  from  any  bank,  v/hen-  special re- 
ever,  in  his  judgment,  they  are  necessary  to  afford  turns  may  be 
a  full  and  complete  knowledge  of  its  condition  :  called  for. 


72  THE  CURRENCY  AND  THE 

2.  Such  special  returns  shall  be  made  and  signed  in  the  man- 
ner and  by  the  persons  specified  in  the  next  preceding  section, 
PENALTY  FOR  ^"^  cvery  bank  which  neglects  to  make  and  send 
NOT  MAKING  lu  any  such  special  return  within  thirty  days  from 
m  DUE  TmE!"  ^^^  ^a<^^  o^  ^^^  demand  therefor  by  the  Minister  of 
Finance  and  Receiver  General  shall  incur  a  penalty 
of  five  hundred  dollars  for  each  and  every  day  such  neglect  con- 
tinues ;  and  the  provisions  contained  in  the  last  preceding  sec- 
tion as  to  the  prima  facie  evidence  of  the  date  upon  which 
returns  are  made  up  and  sent  in  thereunder,  shall  apply  to 
returns  made  under  this  section:  Provided  always,  that  the 
Minister  of  Finance  and  Receiver  General  may  extend  the  time 
for  sending  in  such  special  returns  for  such  further  period,  not 
exceeding  thirty  days,  as  he  thinks  expedient. 

87.  The  bank  shall,  within  twenty  days  after  the  close  of  each 

calendar  year,  transmit  or  deliver  to  the  Minister  of 
OFCERTiFiED  Finance  and  Receiver  General,  to  be  by  him  laid  before 
LISTS  OF  Parliament,  a  certified  list  showing  the  names  of  the 

HOLDERS  TO  shareholders  of  the  bank  on  the  last  day  of  such  calen- 
MiNiSTER  OF    ^^^  year,  with  their  additions  and  residences,  the  num- 

FINANCE. 

ber  of  shares  then  held  by  them  respectively,  and  the 
value  at  par  of  such  shares  : 

2.  Such  list  shall  be  delivered  at  the  Department  of  Finance,  or 
MODE  OF  shall  be  sent  by  registered  letter  posted  at  such  time 
TRANSMissiON.j-j^^^.^  jj^  j-^g  Ordinary  course  of  post,  it  maybe  delivered 
at  the  said  Department  within  the  time  above  limited  : 

3.  Every  bank  which  neglects  to  transmit  such  list  in  manner 
PENALTY  FOR  aforcsaid  within  the  time  aforesaid  shall  incur  a  penalty 
TRANSMIT^  of  fifty  dollars  for  each  and  every  day  during  which 
SUCH  LISTS.      such  neglcct  continues. 

88.  The  bank  shall,  within  twenty  days  after  the  close  of  each 
calendar  year,  transmit  or  deliver  to  the  Minister  of  Finance  and 
»XTXTTT«T  Receiver  General,  to  be  by  him  laid  before  Parliament, 

ANNUAL  ■'       ^ 

STATEMENTOFa  rctum  of  all  dividends  which  have  remained  unpaid 
MAiNiNG^^^^'  ^°^  rnore  than  five  years,  and  also  of  all  amounts  or 
UNPAID,  Etc.      balanccs   in   respect    to   which    no   transactions   have 


BANKING  LA  W  OF  CANADA.  73 

taken  place  or  upon  which  no  interest  has  been  paid  during  the 
five  years  prior  to  the  date  of  such  return  :  Provided  ahvays, 
that  in  case  of  moneys  deposited  for  a  fixed  period,  the  period  of 
five  years  above  referred  to  shall  be  reckoned  from  the  proviso. 

date  of  the  termination  of  such  fixed  period : 

2.  Such  return  shall  be  signed  in  the  manner  required  for  the 
monthly  returns  under  section  eighty-five  of  this  Act,  and  shall  set 
forth  the  name  of  each  shareholder  or  creditor,  his  last  details  of 
known  address,  the  amount  due,  the  agency  of  the  return. 
bank  at  which  the  last  transaction  took  place,  and  the  date  thereof ; 
and  if  such  shareholder  or  creditor  is  known  to  the  bank  further  de- 
to  be  dead,  such  return  shall  show  the  names  and  ad-  tails. 
dresses  of  his  legal  representatives,  so  far  as  known  to  the  bank  : 

3.  Every  bank  which  neglects  to  transmit  or  deliver  to  the  Min- 
ister of  Finance  and  Receiver  General  the  return  above  referred  to, 
wMthin  the  time  hereinbefore  limited,  shall  incur  a  pen-  penalty  for 
alty  of  fifty  dollars  for  each  and  every  day  during  annual re- 
which  such  neglect  continues  :  turn. 

4.  If,  in  the  event  of  the  winding  up  of  the  business  of  the  bank 
in  insolvency,  or  under  any  general  winding-up  Act,  or  otherwise,  any 
moneys  payable  by  the  liquidator,  either  to  shareholders  or  deposit- 
ors, remain  unclaimed  for  the  period  of  three  years  disposal  of 
from  the  date  of  suspension  of  payment  by  the  bank,  unclaimed 
or  from  the  commencement  of  the  winding  up  of  such 

business,  or  until  the  final  winding  up  of  such  business,  if  such 
takes  place  before  the  expiration  of  the  said  three  years,  such 
moneys  and  all  interest  thereon  shall,  notwithstanding  any  statute  of 
limitations  or  other  Act  relating  to  prescription,  be  paid  to  the  Min- 
ister of  Finance  and  Receiver  General,  to  be  held  by  him  subject  to 
all  rightful  claims  on  behalf  of  any  person  other  than  the  bank ;  and 
in  case  a  claim  to  any  moneys  so  paid  as  aforesaid  is  thereafter  estab- 
lished to  the  satisfaction  of  the  Treasury  Board,  the  Governor  in 
Council  shall,  on  the  report  of  the  Treasury  Board,  direct  payment 
thereof  to  be  made  to  the  person  entitled  thereto,  together  with  in- 
terest on  the  principal  sum  thereof  at  the  rate  of  three  per  cent,  per 


74  THE  CURRENCY  AND  THE 

annum  for  a  period  not  exceeding  six  years  from  the  date  of  pay- 
ment thereof  to  the  said  Minister  of  Finance  and  Receiver  General 
as  aforesaid :  Provided  however,  that  no  such  interest 
shall  be  paid  or  payable  on  such  principal  sum,  unless 
interest  thereon  was  payable  by  the  bank  paying  the  same  to  the 
said  Minister  of  Finance  and  Receiver  General :  Provided  also,  that 
on  payment  to  the  Minister  of  Finance  and  Receiver 

PROVISO.  /^ii  .  .,1111  1-  111 

General  as  herem  provided,  the  bank  and  its  assets  shall 
be  held  to  be  discharged  from  further  liability  for  the  amounts  so 
paid. 

5.  Upon  the  winding  up  of  a  bank  in  insolvency  or  under  any 
general  winding-up  Act,  or  otherwise,  the  assignees,  liquidators, 
REOUIRE  directors  or  other  officials  in  charge  of  such  winding  up, 

MENTSASTO  shall,  bcfore  the  final  distribution  of  the  assets,  or 
NOTES  IN  CASE  ^^^-^^'^  three  years  from  the  commencement  of  the 
OFiNSOLVENCY.suspension  of  payment  by  the  bank,  whichever  shall 
first  happen,  pay  over  to  the  Minister  of  Finance  and  Receiver 
General  a  sum  out  of  the  assets  of  the  bank  equal  to  the  amount 
then  outstanding  of  the  notes  intended  for  circulation  issued  by  the 
bank ;  and,  upon  such  payment  being  made,  the  bank  and  its  assets 
shall  be  relieved  from  all  further  liability  in  respect  of  such  outstand- 
ing notes.  The  sum  so  paid  shall  be  held  by  the  Minister  of  Finance 
and  Receiver  General  and  applied  for  the  purpose  of  redeeming, 
whenever  presented,  such  outstanding  notes,  without  interest. 

INSOLVENCY. 

89.  In  the  event  of  the  property  and  assets  of  the  bank  being 
LIABILITY  OF  insufficient  to  pay  its  debts  and  liabilities,  each  share- 
IrsScase  OF  holder  of  the  bank  shall  be  liable  for  the  deficiency 
INSUFFICIENCY  to  an  amount  equal  to  the  par  value  of  the  shares 
OF  ASSETS.  j^gjjj  i^y  hxvsx^  iu  addition  to  any  amount  not  paid  up 
on  such  shares. 

90.  As  a  condition  of  the  rights  and  privileges  conferred  by  this 
Act  or  by  any  Act  in  amendment  thereof,  the  following  provision 


BANKING  LA  W  OF  CANADA. 


75 


shall  have  effect  : — The  liabiUty  of  the  bank  under  any  provision  as 
law,  custom,  or  agreement  to  repay  moneys  deposited  toprescrip- 
with  it  and  interest  (if  any)  and  to  pay  dividends  de-  statute  of 
clared  and  payable  on  its  capital  stock,  shall  continue  limitations. 
notwithstanding  any  statute  of  limitations  or  any  enactment  or  law 
relating  to  prescription  : 

2.  This  section  applies  to  moneys  heretofore  or  hereafter  deposited, 
and  to  dividends  heretofore  or  hereafter  declared.  retroaction. 

91.  Any  suspension  by  the  bank  of  payment  of  any  of  its  liabili- 
ties as  they  accrue,  in  specie  or  Dominion  notes,  shall,  if  it  continues 
for  ninety  days,  consecutively,  or  at   intervals  within 

4.        1  ..•  4.U  *-^    *.     .u      u       1     •         1  SUSPENSION 

twelve  consecutive  months,  constitute  the  bank  insolv- forqoDaysto 
ent  and  operate  a  forfeiture  of  its  charter  or  Act  of    constitute 
J  f  J       11    r      1        .      ,  •         insolvency. 

incorporation,    so    tar   as  regards  all   further  banking 

operations ;  and  the  charter  or  Act  of  incorporation  shall  remain  in 
force  only  for  the  purpose  of  enabling  the  directors  or  other  lawful 
authority  to  make  and  enforce  the  calls  mentioned  in  the  next  fol- 
lowing sections  of  this  Act  and  to  wind  up  its  business. 

92.  If  any  suspension  of  payment  in  full  in  specie  or  Dominion 
notes  of  all  or  any  of  the  notes  or  other  liabilities  of  the  bank  con- 
tinues for  three  months  after  the  expiration  of  the  time  calls  in  such 
which,  under  the  preceding  section,  would  constitute  cases. 
the  bank  insolvent,  and  if  no  proceedings  are  taken  under  any  gen- 
eral or  special  Act  for  the  winding  up  of  the  bank,  the  directors  shall 
make  calls  on  the  shareholders  thereof,  to  the  amount  they  deem 
necessary  to  pay  all  the  debts  and  liabilities  of  the  bank,  without  wait- 
ing for  the  collection  of  any  debts  due  to  it  or  the  sale  of  any  of  its 
assets  or  property : 

2.  Such  calls  shall  be  made  at  intervals  of  thirty  days,  and  upon 
notice  to  be  given  thirty  days  at  least  prior  to  the  day  on  which  such 
call  shall  be  payable,  and  any  number  of  such  calls  may  how  such 
be  made  by  one  resolution  ;  any  such  call  shall  not  ex-^J[j^^p^"Jp^p^^F 
cccd  twenty  per  cent,  on  each  share ;  and  payment  of  forced. 

such  calls  may  be  enforced   in  like  manner  as  payment  of  calls  on 


76  THE  CURRENCY  AND  THE 

unpaid  stock  may  be  enforced  ;  and  the  first  of  such  calls  may  be 
made  within  ten  days  after  the  expiration  of  the  said  three  months  : 
3.  Every  director  who  refuses  to  make  or  enforce,  or  to  concur 
REFUSAL  TO  ^'^  making  or  enforcing  any  call  under  this  section,  is 
MAKE  CALLS  guilty  of  a  misdemeanor,  and  hable  to  imprisonment 
SECT^iON Tmis-  ^°^  ^"y  term  not  exceeding  two  years,  and  shall  fur- 
DEMEANOR.  ther  be  personally  responsible  for  any  damages  suffered 
by  such  default, 

93.  In  the  event  of  proceedings  being  taken  under  any  general 
or  special  winding-up  Act,  in  consequence  of  the  in- 

CALLS  UNDER  ^  fc.      r  '  ^ 

WINDING-UP     solvency  of  the  bank,  the  said  calls  shall  be  made  in 
^^"^-  the  manner  prescribed  for  the  making  of  such  calls  in 

such  general  or  special  winding-up  Act. 

94.  Any  failure  on  the  part  of  any  shareholder  liable  to  any 
such  call  to  pay  the  same  when  due,  shall  operate 
FOR^No™PAY-  ^  forfeiture  by  such  shareholder  of  all  claim  in  or  to 
MENT.  any  part  of  the  assets  of  the  bank,— such  call  and 

any  further  call  thereafter  being  nevertheless  re- 
coverable from  him  as  if  no  such  forfeiture  had  been  incurred. 

95-  Nothing  in  the  six  sections  next  preceding  contained  shall  be 
LIABILITY  OF    coustrued  to  alter  or  diminish  the  additional  liabilities 

DIRECTORS  ,     ,        ,.  ,  .    ,      r  .  ,,,11 

NOT  DiMiN.      of  the  directors  as  herembefore  mentioned  and  declared. 

ISHED. 

96.  Persons  who,  having  been  shareholders  of  the  bank, 
have  only  transferred  their  shares,  or  any  of  them,  to  others, 

or  registered  the  transfer  thereof  within  sixty  days 
shar^ehoId-^  before  the  commencement  of  the  suspension  of  pay- 
ERswHo  HAVEment  by  the  bank,  and  persons  whose  subscriptions 
THEm^sTocK^  ^o  ^^^  s^o^^  ^^  ^^^  ^^"^  h^ve  been  cancelled  in 

manner  hereinbefore  provided  within  the  said  pe- 
riod of  sixty  days  before  the  commencement  of  the  suspension 
of  payment  by  the  bank,  shall  be  liable  to  all  calls  on  the  shares 
held  or  subscribed  for  by  them,  as  if  they  held  such  shares  at 
the  time  of  such  suspension  of  payment,  saving  their  recourse 
against  those  by  whom  such  shares  were  then  actually  held. 


BANKING  LAW  OF  CANADA.  77 

OFFENCES   AND    PENALTIES. 

97.   Every  one  is  guilty  of  a  misdemeanor  and  liable  to  imprison- 
ment for  a  term  not  exceeding  two  years  who,  being  the  president, 
vice-president,  director,  principal  partner  en  commandite, 
manager,  cashier  or  other  officer  of  the  bank,  wilfully      Erf  ^cmN-G 
gives  or  concurs  in  giving  any  creditor  of  the  bank  any    undue  pref- 

rii.  AC-  C  ^u  ERENCE  TO 

fraudulent,  undue  or  unfair  preference  over  other^Nv creditor, 
creditors,  by  giving   security  to  such   creditor  or   by     guilty  of  a 

.  ,  ,    ,   .        ,    .  ,  .  ,  MISDEMEANOR. 

changmg  the  nature  of  his  claim  or  otherwise  howso- 
ever, and  shall  further  be  responsible  for  all  damages  sustained  by 
any  person  in  consequence  of  such  preference. 

98.  The  amount  of  all  penalties  imposed  upon  a  bank  for  any 
violation  of  this  Act  shall  be  recoverable  and  enforceable  with  costs, 
at  the  suit  of  Her  Majesty,  instituted  by  the  Attorney  recovery 
General  of  Canada,  or  the  Minister  of  Finance  and  and  disposal 
Receiver  General,  and  such  penalties  shall  belong  to  of  penalties. 
the  Crown  for  the  public  uses  of  Canada ;  but  the  Governor  in 
Council,  on  the  report  of  the  Treasury  Board,  may  direct  that  any 
portion  of  any  penalty  be  remitted  or  paid  to  any  person,  or  applied 
in  any  manner  deemed  best  adapted  to  attain  the  objects  of  this 
Act  and  to  secure  the  due  administration  thereof. 

99.  The  making  of  any  wilfully  false  or  deceptive  statement  in 
any  account,  statement,  return,  report  or  other  document  respecting 
the  affairs  of  the  bank,  is,  unless  it  amounts  to  a  higher  making  false 
offence,  a   misdemeanor  punishable  by  imprisonment     statement 

,.  ~  ,  .         IN  RETURNS, 

for  a  term  not  exceeding  five  years  ;  and  every  presi-  etc..  a  misde- 
dent,  vice-president,  director,  principal  partner  en  meanor,  etc. 
commandite,  auditor,  manager,  cashier  or  other  oflficer  of  the  bank, 
who  prepares,  signs,  approves  or  concurs  in  such  statement,  return, 
report  or  document,  or  uses  the  same  with  intent  to  deceive  or  mis- 
lead any  person,  shall  be  held  to  have  wilfully  made  such  false  state- 
ment, and  shall  further  be  responsible  for  all  damages  sustained  by 
any  person  in  consequence  thereof. 


78  THE  CURRENCY  AND  THE 

100.  Every  person  assuming  or  using  the  title  of  "  bank," 
UNAUTHOR-  "banking  company,"  "banking  house,"  "banking 
izED  USE  OF  association,"  or  "banking  institution,"  without  be- 
TiTLE  "  BANK,"  jjjg  authorized  SO  to  do  by  this  Act,  or  by  some 

other  Act  in  force  in  that  behalf,  is  guilty  of  an  of- 
fence against  this  Act. 

loi.  Every  person,  committing  an  offence  declared  to  be  an 

offence  against  this  Act,  shall  be  liable  to  a  fine  not 
OFFENCE  exceeding  one  thousand  dollars,  or  to  imprisonment 

AGAINST  THIS  for  a  tcrm  not  exceeding  five  years,  or  to  both,  in 

the  discretion  of  the  court  before  which  the  con- 
viction is  had. 

PUBLIC   NOTICES. 

102.  The  several  public  notices  by  this  Act  required  to  be 

given  shall,  unless  otherwise  specified,  be  given  by 

HOW  NOTICES  advertisement  in  one  or  more  newspapers  published 

CTJ  A  T   T       "RT? 

GIVEN.  at  the  place  where  the  head  office  of  the  bank  is 

situate,  and  in  the  Canada  Gazette, 

DOMINION   GOVERNMENT   CHEQUES. 

103.  The  bank  shall  not  charge  any  discount  or 
cHEQUEs^To^  commlsslon  for  cashing  any  official  cheque  of  the 
BE  PAID  AT  Government  of  Canada,  or  of  any  department 
^^^-  thereof,  whether  drawn  on  itself  or  on  another  bank. 

COMMENCEMENT   OF    ACT   AND    REPEAL. 

104.  This  Act  shall  come  into  force  on  the  first  day  of  July,  in 
the  year  one  thousand  eight  hundred  and  ninety-one ;  and  from 
COMMENCE-  ^^^^  ^^y  chapter  one  hundred  and  twenty  of  the  Re- 
MENTOFTHis  viscd  Statutcs  of  Canada,  intituled  "-An  Act  respecting 
^^^'  Banks  and  Banking,''  the  Act  passed  in  the  fifty-first 

REPEAL  OF  year  of  Her  Majesty's  reign,  chapter  twenty-seven,  in 
AND  op'^srv.,  c.  amendment  thereof,  the  Act  passed  in  the  session  held 
27  AND  50-51  v.,  in  the  thirty-third  year  of  Her  Majesty's  reign,  chapter 
^'^^'  twelve,    intituled   ^^An  Act    to   remove  certain  restric- 

tions with  respect  to  the  issue   of  bank  notes  in  Nova   Scotia,''   the 


BANKING  LAW  OF  CANADA.  79 

Act  passed  in  the  session  held  in  the  fiftieth  and  fifty-first  years 
of  Her  Majesty's  reign,  chapter  forty-seven,  intituled  'M«  Act 
respecting  the  defacing  of  cotinterfeit  7iotes,  and  the  use  of  imitatioyis 
of  notes,"  and  chapter  one  hundred  and  twenty  of  the  Revised 
Statutes  of  New  Brunswick,  "  Of  Banking,''  and  the  Act  passed  by 
the  Legislature  of  the  Province  of  New  Brunswick  in  the  nineteenth 
year  of  Her  Majesty's  reign,  chapter  forty-seven,  intituled  "  An  Act 
to  explain  chapter  120,  Title  XXXI,  of  the  Revised  StatJites,  '  Of 
Banking,'  "  shall  be  repealed,  except  as  to  rights  there-  saving 

tofore  acquired  or  liabilities  incurred  in  regard  to  any  clause. 

matter  or  thing  done  or  contract  or  agreement  made  or  entered 
into  or  offences  committed  under  the  said  chapters  or  Acts,  and 
nothing  in  this  Act  shall  effect  any  action  or  proceedings  then 
pending  under  the  said  chapter  or  Acts  then  repealed,  but  the  same 
shall  be  decided  as  if  such  chapters  and  Acts  had  not  been  repealed. 


SCHEDULE    A. 


BANKS   WHOSE   CHARTERS   ARE   CONTINUED   BY  THIS   ACT. 


1.  The  Bank  of  Montreal. 

2.  The  Quebec  Bank. 

3.  La  Banque  du  Peuple. 

4.  The  Molsons  Bank. 

5.  The  Bank  of  Toronto. 

6.  The  Ontario  Bank. 

7.  The  Eastern  Townships  Bank. 

8.  La  Banque  Nationale. 

9.  La  Banque  Jacques  Cartier. 

10.  The  Merchants'  Bank  of   Canada. 

11.  The  Union  Bank  of  Canada. 

12.  The  Canadian  Bank  of  Commerce. 

13.  The  Dominion  Bank. 

14.  The  Merchants'  Bank  of  Halifax. 


So  THE  CURRENCY  AND  THE 

15.  The  Bank  of  Nova  Scotia. 

16.  The  Bank  of  Yarmouth. 

17.  La  Banque  Ville  Marie. 

18.  The  Standard  Bank  of  Canada. 

19.  The  Bank  of  Hamilton. 

20.  The  HaHfax  Banking  Company. 

21.  La  Banque  d'Hochelaga. 

22.  The  Imperial  Bank  of  Canada. 

23.  La  Banque  de  St.  Hyacinthe. 

24.  The  Bank  of  Ottawa. 

25.  The  Bank  of  New  Brunswick. 

26.  The  Exchange  Bank  of  Yarmouth. 

27.  The  Union  Bank  of  Halifax. 

28.  The  People's  Bank  of  Halifax. 

29.  La  Banque  de  St.  Jean. 

30.  The  Commercial  Bank  of  Windsor. 

31.  The  Western  Bank  of  Canada. 

32.  The  Commercial  Bank  of  Manitoba. 

33.  The  Traders'  Bank  of  Canada. 

34.  The  People's  Bank  of  New  Brunswick. 

35.  The  Saint  Stephen's  Bank. 

36.  The  Summerside  Bank. 


SCHEDULE   B 

FORIM   OF  ACT   OF  INCORPORATION   OF  NEW   BANKS. 
An  Act  to  incorporate  the  Bank. 

Whereas  the  persons  hereinafter  named  have,  by  their  petition, 
prayed  that  an  Act  be  passed  for  the  purpose  of  establishing  a  bank 
in  ,  and  it  is  expedient  to  grant  the  prayer  of  the 

said  petition  : 

Therefore  Her  Majesty,  by  and  with  the  advice  and  consent  of 
the  Senate  and  House  of  Commons  of  Canada,  enacts  as  follows  : — 

I.  The  persons  hereinafter  named,  together  with  such  others  as 


BANKING  LAW  OF  CANADA.  8i 

become  shareholders   in  the  corporation   by  this  Act  created,   are 
hereby  constituted  a  corporation  by  the  name  of 
hereinafter  called  "  the  Bank." 

2.  The  capital  stock  of  the  bank  shall  be 
dollars. 

3.  The  chief  office  of  the  bank  shall  be  at 

4- 

shall  be  the  provisional  direc- 
tors of  the  bank. 

5.  This  Act  shall,  subject  to  the  provisions  of  section  sixteen  of 
"The  Bank  Act,"  remain  in  force  until  the  first  day  of  July,  in  the 
year  one  thousand  nine  hundred  and  one. 


SCHEDULE  C. 

FORM   OF   SECURITY   UNDER   SECTION   SEVENTY-FOUR. 

In  consideration  of  an  advance  of  dollars,  made 

by  the  {name  of  bank)  to  A.  B.,  for  which  the  said  bank  holds  the 
following  bills  or  notes  {describe  fully  the  notes  or  bills  held,  if  any), 
the  goods,  wares  and  merchandise  mentioned  below  are  hereby 
assigned  to  the  said  bank  as  security  for  the  payment,  on  or  before 
the  day  of  of  the  said  advance,  together  with  in- 

terest thereon  at  the  rate  of  per  cent,  per  annum  from 

the  day  of  {or,  of  the  said  bills  and  notes,  or 

renewals  thereof,  or  substitutions  therefor,  and  interest  thereon,  or 
as  the  ease  may  be). 

This  security  is  given  under  the  provisions  of  section  seventy- 
four  of  "  The  Bank  Act,"  and  is  subject  to  all  the  provisions  of  the 
said  Act. 

The  said  goods,  wares  and  merchandise  are  now  owned  by 
and  are  now  in         possession,  and  are  free  from  any  mortgage,  lien 
or  charge  thereon  {or  as  the  ease  may  be),  and  are  in  {plaee  or  places 
where  goods  are),  z\\<\  are  the  following:  {particular  description  of 
goods  assigned). 

Dated  at  18     . 


82 


THE  CURRENCY  AND  2HE 


SCHEDULE  D. 

Return  of  the  liabilities  and  assets  of  the 
on  the  day  of  ,  A. 

Capital  authorized       .... 
Capital  subscribed       .... 

Capital  paid  up 

Amount  of  rest  or  reserve  fund 

Rate  per  cent,  of  last  dividend  declared. 


D. 

% 

% 


bank 


per  cent. 


LIABILITIES. 

1.  Notes  in  circulation  .         .         .  $ 

2.  Balance     due   to    Dominion    Govern- 

ment, after  deducting  advances  for 
credits,  pay-lists,    etc 

3.  Balance    due   to    Provincial    Govern- 

ments         

4.  Deposits    by    the  public,    payable   on 

demand    ...... 

5.  Deposits  by  the  public,  payable   after 

notice  or  on  a  fixed  day  . 

6.  Loans  from    other  banks   in    Canada, 

secured     ...... 

7.  Deposits,  payable  on  demand  or  after 

notice  or  on   a  fixed   day,  made  by 
other  banks  in  Canada 

8.  Balances  due  to  other  banks  in  Can 

ada  in  daily  exchanges     . 

9.  Balances  due  to  agencies  of   the  bank 

or  to  other  banks  or  agencies  in  for 
eign  countries    . 

10.  Balances  due  to  agencies  of  the  bank 

or    to    other   banks  or   agencies    in 
the  United  Kingdom 

11.  Liabilities    not    included    under    fore 

going  heads      .... 


BANKING  LA  W  OF  CANADA.  %^ 

ASSETS. 

1.  specie $ 

2.  Dominion  notes  ..... 

3.  Deposits  with  Dominion  Government 

for  security  of  note  circulation 

4.  Notes  of  and  cheques  on  other  banks. 

5.  Loans  to  other  banks  in   Canada,  se- 

cured         

6.  Deposits,  payable  on  demand  or  after 

notice  or  on  a  fixed  day,  made  with 
other  banks  in  Canada     . 

7.  Balances   due    from    other    banks   in 

Canada  in  daily  exchanges 

8.  Balances  due    from    agencies    of    the 

bank,  or  from  other  banks  or  agen- 
cies in  foreign  countries  . 

9.  Balances    due    from    agencies  of   the 

bank,  or  from  other  banks  or  agen- 
cies in  the  United  Kingdom    . 

10.  Dominion  Government  debentures  or 

stocks 

11.  Canadian    municipal     securities,    and 

British,  Provincial,  or  foreign,  or 
colonial  public  securities,  (other  than 
Dominion)        ..... 

12.  Canadian    British    and    other   railway 

securities ..... 

13.  Call  loans  on  bonds  and   stocks  . 

14.  Current  loans       .... 

15.  Loans  to  the  Government  of  Canada 

16.  Loans  to  Provincial  Governments 

17.  Overdue  debts     .... 

18.  Real  estate,  the  property  of  the  bank 

(other  than  the  bank  premises) 

19.  Mortgages  on  real  estate  sold  by  the 

bank 

20.  Bank  premises      .... 

21.  Other  assets  not  included   under  the 

foregoing  heads        .... 


84  BANKING  LA  W  OF  CANADA. 

Aggregate  amount  of  loans  to  directors,  and  firms  of  which  they 

are  partners,  $ 

Average  amount  of  specie  held  during  the  month,  % 

Average  amount  of  Dominion  notes  held  during  the  month,  $ 

Greatest  amount  of  notes  in  circulation  at  any  time  during  the 

month,  % 

I  declare  that  the  above  return  has  been  prepared  under  my 

directions  and  is  correct  according  to  the  books  of  the  bank. 

E.  F., 

Chief  Accountant. 

We  declare  that  the  foregoing  return  is  made  up  from  the  books 
of  the  bank,  and  that  to  the  best  of  our  knowledge  and  belief  it  is  cor- 
rect, and  shows  truly  and  clearly  the  financial  position  of  the  bank ; 
and  we  further  declare  that  the  bank  has  never,  at  any  time  during 
the  period  to  which  the  said  return  relates,  held  less  than  forty  per 
cent,  of  its  cash  reserves  in  Dominion  notes. 
{Place)  this  day  of 

A.  B.,  President. 
C.  D.,  General  Manager. 


MEMORANDA. 

The  currency  of  Canada  is  in  dollars,  cents,  and  mills,  at  the  rate 
of  lo  mills  for  a  cent  and  lOO  cents  for  a  dollar.  The  British  sover- 
eign is  legal  tender  for  $4.86^, 

Silver  coin  minted  for  circulation  in  Canada  by  order  of  Queen 
Victoria,  is  legal  tender  to  the  amount  of  ten  dollars,  and  copper 
coin  to  the  amount  of  twenty-five  cents.  The  gold  eagle  of  the 
United  States  is  legal  tender  for  ten  dollars.  Canada  has  ho  gold 
coinage  of  her  own. 

The  Government  of  Canada  and  the  chartered  banks  only  are 
authorized  to  issue  paper  money.  The  Government  currency  is 
issued  in  denominations  of  four  dollars,  two  dollars,  one  dollar, 
and  twenty-five  cents  ;  no  bank  being  permitted  to  issue  notes  for 
less  sum  than  five  dollars,  or  for  any  sum  not  a  multiple  of  five 
dollars.     The  Dominion  note  issue  is  limited  to  $21,000,000. 

$1 1,000,000  of  the  Dominion  note  circulation  are  in  notes  of  $500 
and  $1,000,  and  are  principally  held  by  the  banks  as  part  of  their 
cash  reserve. 

In  order  to  secure  the  redemption  of  Dominion  Government 
notes,  the  Minister  of  Finance  is  required  to  hold  in  gold  and 
securities  guaranteed  by  the  Imperial  Government,  a  sum  equal  to 
25  per  cent,  of  the  amount  issued,  of  which  15  per  cent,  must  be  in 
gold  and  10  per  cent,  in  guaranteed  securities — the  remaining  75  per 
cent,  to  be  covered  by  Dominion  debentures,  issued  by  authority  of 
Parliament. 

The  development  of  banking  business  in  Canada  is  seen  from  the 
following  statement : 

85 


86 


BANKING  LA  W  OF  CANADA. 


1871 
1881 
iSgr 


Capital  Paid 
Up,  Per  Head 
of  Population. 


$10.30 
13.76 
12.56 


Circulation 

Per 

Head. 


$5.75 
6.60 
6.54 


People's  De- 
posits Per 
Head. 


$15.48 
21.81 


People's  Dis- 
counts Per 
Head. 


$23-33 
27.04 
35.40 


$22.07 
29.40 

38.75 


$34.46 
46.38 

55-72 


In  addition  to  the  capital  paid  up  in  1891,  the  reserve  fund  of 
the  banks  in  that  year  amounted  to  $4.72  per  head  of  population. 

The  first  chartered  bank  to  suspend  business  since  Confederation 
(1867)  was  the  Commercial  Bank  of  New  Brunswick.  The  Bank  of 
Acadia  (Liverpool,  N.  S.),  suspended  in  1873  ;  the  Metropolitan  Bank 
of  Montreal  in  1877;  the  Mechanics'  Bank  of  Montreal,  the  Consoli- 
dated Bank  of  Montreal,  the  Bank  of  Liverpool,  N.  S.,  and  the 
Stadacona  Bank  of  Quebec,  in  1879  !  the  Exchange  Bank  of 
Canada,  in  1883  ;  the  Maritime  Bank,  of  St.  John,  N.  B.,  the  Pictou 
Bank,  the  Bank  of  London,  Ont.,  and  the  Central  Bank  of  Canada 
retired  from  business  in  1887,  and  the  Federal  Bank  in  1888  ;  the 
Commercial  Bank  of  Manitoba  closed  its  doors  in  1893.  In  all, 
fourteen  banks  have  suspended,  representing  assets  of  over  $22,000,- 
000,  and  liabilities  of  over  $15,000,000. 

The  Commercial  Bank  of  Manitoba  failed  in  July,  1893.  The 
notes  of  the  bank  were  all  paid  in  full  soon  after  the  failure. 

The  following  table  gives  average  paid  up  capital,  assets,  liabilities, 
and  other  particulars  of  the  various  banks  in  operation  in  the  years 
1870,  1880,  1890,  and  1893,  since  Confederation,  according  to  the 
returns  made  to  the  Government  as  required  by  the  Bank  Act. 


1870 
1880 
1890 
1893 


Capital  Paid 
Up. 


$33,031,249 
60,052,117 
59,974,902 
62,009,346 


Notes  jn 
Circulation. 


$15,149,031 
22,529,623 
32,834,511 
33,811,925 


Total  on  De- 
posit. 


$48,763,205 

85,303,814 

135.548,704 

174,776,722 


Total  of  Dis- 
counts to  the 
People. 


$66,276,961 
102,166,115 

153,301,335 
205,623,042 


$65,685,870 
111,838,941 
173,207,587 
217,195,975 


$103,197,103 
184,276,190 
254,546,329 
302,696,715 


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THIS  BOOK  IS  DUE  ON  THE  LAST  DATE 
STAMPED  BELOW 


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^'■-Li: 


AN  INITIAL  FINE  OF  25  CENTS 

WILL  BE  ASSESSED  FOR  FAILURE  TO  RETURN 
THIS  BOOK  ON  THE  DATE  DUE.  THE  PENALTY 
WILL  INCREASE  TO  50  CENTS  ON  THE  FOURTH 
DAY  AND  TO  $1.00  ON  THE  SEVENTH  DAY 
OVERDUE. 


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